jUNE 2009 11
Tab
le 2
Ownership Structure of the Eight Largest Banks in Uzbekistan
Name
of the bank
Ownership
str
ucture
Direct or indirect state
par
ticipation in bank capital*
Relationship to
pre
vious banking
system
F
ounding
date
National Bank f
or F
oreign Eco
-
no
m
ic
A
ct
iv
ity
o
f t
he
Repub
lic of Uzbekistan (NB
U)
State-o
wned
100
percent state
Vneshek
onombank
October 25, 1991
Promstroibank
Joint stoc
k
Uzbekneftegaz, Uzqishloqxujalik
-
mashinasozlik, Uzbekistan Railroads
,
Na
voi and Olmalyq mining comple
x
Promstroibank
June 25, 1991
P
axta Bank (Cotton Bank)
Joint stoc
k
Uzpaxtasanoatsotish, Uzag
rosu
’
gur
ta,
Uzqishloqxojalikmashholding
Ag
roprombank
July 1, 1991
Xalq Bank (P
eople’
s Bank)
State-o
wned
100 percent state
Sa
vingsbank
March 16, 1992
G’allabank (Gr
ain Bank)
Joint stoc
k
Uzdunmahsulot
and some other regional br
anches of this organization
Not
related
A
ugust 2, 1994
Sa
vdogarbank
(Merchant Bank)
Joint stoc
k
Ministr
y of Finance
, Uzbeksa
vdo
,
Uzme
vasabza
vot
Not related
Ma
y 21, 1994
Ipoteka bank**
(Mor
tgage Bank)
Joint stoc
k
Ministr
y of Finance
, Municipality of
the city of
Tashk
ent,
State Proper
ty
Committee
Not related
Apr
il 28, 1994
Asaka Bank
Joint stoc
k
Ministr
y of Finance
, Uza
vtosanoat, NB
U
Not related
Jan
uar
y 19, 1996
So
ur
ce
s:
F
. Mullajono
v,
O
’
zbekiston
Respublikasi
Bank
Tizimi
(T
ashk
ent:
Uzbekistan,
2001);
Central
Bank
of
Uzbekistan,
“List
of
Banks
Carrying
out
Commercial
Acti
vities in the
Territory
of Uzbekistan,
” a
vailable at http://cb
u.uz/uz/cred_or
g/com_banks.htm (T
ashk
ent, 2007).
*All institutions listed in the third column are either state agencies or state-o
wned companies.
**Ne
w name of the Uyjo
yjamg
armabank after its mer
ger
with a smaller bank, Zamin Bank, in 2005.
12 PROBLEMS OF ECONOMIC TRANSITION
As the third column of Table 2 shows, all banks in the list are
state-owned either directly or indirectly: the NBU and Xalq Bank
are 100 percent state-owned; the rest are indirectly controlled by
the state through major stockholders, which are ministries, state
agencies (former industrial ministries), and state-owned enterprises.
Such a concentration of the banking sector need not necessarily be
a bad thing.
4
In contrast to other sectors of the economy, the bank-
ing sector’s success depends upon the confidence of the general
public. Because larger banks have a more widespread network of
branches and can offer a richer menu of services, they tend to instill
confidence in the banking system. As discussed in detail below, in
Uzbekistan, banking sector concentration occurred for different
reasons and it serves a different purpose.
Reorganization and modernization of the payments system was
one of the most important and noteworthy reforms in the Uzbek
banking sector during transition.
The payments system under
central planning required the physical transportation of payment
documents and was thus slow, inefficient, and unreliable. The signs
of obsolescence in the old payments system became especially
evident between 1991 and 1993 when the differences in timing
between crediting and debiting of accounts, caused by delays in
the transmission of payment information and in the subsequent
registration of accounting entries, increased significantly across all
FSU countries (Balino, Dhawan, and Sandararajan, 1994; Balino,
Johnson, and Sandararajan, 1996).
Therefore, the banking reform also necessitated that urgent at-
tention be paid to the establishment of a well-functioning payments
system. An efficient
system of processing debits and credits arising
from deposit-based transactions facilitates the transfer of owner-
ship claims in the financial sector and thus fosters the corporate
sector’s trust in banks. To facilitate this process, in 1994, the Uzbek
government announced a four-year tax holiday for all commercial
banks in the country, regardless of their ownership structure, with
the condition that the banks were to use these resources only for
the technical development of the sector. As a result, Uzbekistan’s
payments system became one of the first to be modernized in the
FSU (Mullajonov, 2004, p. 3). From 1991 to 1994, the average
