Citibank Kazakhstan continued to grow its business in 2008 and this year, to date. We have been adding clients, providing value added solutions to our customer base and increasing our volumes in both our funding activities and our transactional banking areas.

Tell please about business activity and development of Citibank Kazakhstan in 2008-2009.

Citibank Kazakhstan continued to grow its business in 2008 and this year to date. We have been adding clients, providing value added solutions to our customer base and increasing our volumes in both our funding activities and our transactional banking areas.

At the moment there is a discussion between FSA and banks on deposit rate due to very high existing deposit rates. What deposit rates your bank offers and what deposit products do you have? What is optimal deposit rate at your opinion?

The deposit rates that Citi Kazakhstan offers to its clients at the moment are from 5% to 7% in KZT and from 1.5% to 2.75% in USD depending on the tenor. Please note that interest rates on deposits can vary substantially subject to market conditions and the strategy of any particular bank on deploying the funds it raises. Citibank Kazakhstan is focused on large corporate and financial institutions on both sides of the balance sheet, so we are not trying to compete for individual or retail deposits where many of the local banks are concentrating. Therefore, picking an optimal systemic interest rate is a bit difficult, but somewhere in the 8-9% range looks reasonable. However since there is excess liquidity in the banking sector presently due to the government’s fiscal stimulus, rates tend to be lower.

Most of local banks significantly reduce landing volumes. Do you work at this direction? What are the results in 2008-2009? What economy sectors do you finance, is it corporate finance?

Citibank Kazakhstan continues to support its long-standing relationships and there has been no intentional reduction of lending volumes in 2008 nor in 2009. Citi has always had a conservative lending strategy and an extremely selective process in identifying the clients that we want to work with and on which we want to take risk. As a result, our portfolio is strong even in these more difficult times. Our target market covers the country's top names in the public sector, oil and gas, metals and mining, telecom, and consumer goods industries as well as the subsidiaries of Citi's global relationship customers.

Does Citi have any plans to increase its share of the local financial market? What are your general plans for 2009-2010?

Our strategy does not assume aggressive expansion, we are planning stable and moderate growth which we think is justified given the limited depth of the local market and current status of the economy. That said though, we are of course focused on gaining market share in the space where we have chosen to compete and with the clients we have chosen to serve. We intend to open two new representative offices in Atyrau and Aktau this year, which reinforces our commitment to this market and our willingness to invest in our Kazakhstan business despite the current difficulties. I would expect absolutely no change in this commitment through the rest of this year and for 2010.

Starting April 2009 Citibank Kazakhstan announced about issuing chip cards instead of magnetic strip cards. Tell please what the reason was for that, do you think they will be more popular among your customers?

Citibank started issuing Visa payment cards in 2000 and we have great experience in the implementation of innovative banking technologies. Our cardholders are the employees of our corporate clients and the introduction of payment cards with an embedded micro-processing chip was driven by our constant aspiration for improving the safety of card operations and to protect our cardholders from potential fraudulent transactions. At present, embedded microchips are the most advanced security technology in the payment cards area and we believe our chip card offering will increase the loyalty of our customers.

Tell please about internet-banking of Citi Kazakhstan. Is it popular these days and how it works during the crisis in Kazakhstan?

In the current market environment financial institutions pay high attention to the developing technologies for data protection in electronic banking systems. Such international standards and technologies include cryptographic means and digital certificates as well as the devices generating dynamic passwords that reflect risks related to banking activities. All these technologies have been successfully integrated into our web-based global electronic banking system - CitiDirect(r) Online Banking that received more than 40 international awards in 2008.

Taking into account the high concentration of financial resources in the banking industry, the use of up-to-date technologies for initiation and protection of electronic transactions significantly mitigates the operational risks including fraud and unauthorized activity and decreases the amount of potential financial losses. At the same time, our highly protected electronic banking system is one of the key factors that attracts local and international customers and gives us a significant competitive advantage.

Growth of our customer base and usage of CitiDirect(r) Online Banking by our customers is critical for us. At the moment, more than 99% of all payments initiated by our customers are done through CitiDirect(r) Online Banking. And it is not mandatory for customers to be in Kazakhstan in order to initiate the payment; this can be done from any point in the world any time an Internet connection is available. Our customers have privileges to get automated account information through different channels including e-mails, faxes and mobile phones.

Tell please about social responsibility of the bank? What kind of charity activity demonstrates Citibank in Kazakhstan?

Citigroup is well-known for its commitment to, and support of economic and financial education for young people around the world. A 10-year commitment to fund financial education globally at the $200 million level is part of that commitment. Through the programs that both the Citigroup Foundation and our local businesses support, we are making a difference in the financial knowledge that individuals, small business owners and institutions need in order to make wise decisions.

Junior Achievement Kazakhstan (JA Kazakhstan) is a part of JA Worldwide - a world leader of youth economic education operating in 112 countries around the globe. JA Kazakhstan is a local NGO promoting economic and business education of young people in the Republic of Kazakhstan. It is well-known and respected in the country as the organization has achieved tremendous results in creating opportunities for affordable, high quality business and economic education for over 215,000 young people in Kazakhstan. I am Chairman of the Board of Directors of JA Kazakhstan and Citi provides funding and other support as well.

As a part of our global education program, Citibank Kazakhstan has supported Counterpart International to introduce Strategic Planning and Financial Management training for 15 Disabled People Organizations in different regions of Kazakhstan. We believe that this kind of training will promote financial literacy, help disabled people to be independent and enhance skills in the area of international standards of financial reporting requirements and accounting procedures for NGOs.

Citibank Kazakhstan also provides scholarships to selected students at the Kazakhstan Institute of Management, Economics and Strategic Research every year which are awarded on the basis of need and achievement, and we contribute to education at orphanages by sponsoring English language programs. Citi believes most strongly in contributing to the communities in which it operates and we think our focus on financial education in Kazakhstan is both recognized and appreciated and we will continue to be actively involved both with funding and with our many Citibank volunteers who are personally involved in our efforts.

Last year in January Citibank Kazakhstan announced about its custody service in Kazakhstan. How does it work?

Indeed, in January 2008 Citi Kazakhstan started its direct custody services business. This decision to do so was driven by the interest from Citi's global clients (international investors, international broker-dealers, global custodians, international investment banks) in the capital markets of Kazakhstan as well as by the development of the domestic securities market and the pension fund system of Kazakhstan. As you know, Citi has the widest network of direct custody globally, having a direct custody presence in 57 countries, including the CIS in Russia, Kazakhstan and Ukraine. Citi Kazakhstan was the 51st country where Citi opened Securities and Funds Services (SFS) and custody business as part of SFS. These services are successfully developing according to the business plan. In November last year Citi Kazakhstan became sole custodian for one of the biggest pension funds in the country. Simultaneously, the bank has a number of Citi global clients working on the securities market of Kazakhstan, including Citibank NA itself.

Offering Securities and Funds Services including custody business by Citi Kazakhstan demonstrates our commitment to the emerging markets strategy, CIS countries and to the Republic of Kazakhstan in particular.