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Institutional due diligence at three banks in Turkmenistan

Project Details


Asian Development Bank (ADB)




Turkmenistan / Eastern Europe & Central Asia


Banking & SME Finance


Due Diligence


Marga Scheck

As part of the preparations of a joint project of the Asian Development Bank (ADB) and the Government of Turkmenistan, ADB sought consultancy support. Based on our successful cooperation during the pre-feasibility study for the SME project, ADB asked IPC to carry out further project-related activities. Specifically, IPC was tasked with carrying out in-depth due diligence activities at two financial institutions identified as potential partners for the project as well as conducting a review of the financial institution foreseen as on-lending institution in the project setup. The emphasis in the due diligence activities was placed on assessing governance structures, business focus and growth plans, and evaluating capital adequacy, asset quality, asset and liability management, earnings performance, liquidity and integrity of credit processes (origination and monitoring) as well as quality of management and staff. For the financial institution foreseen to manage on-lending of funds, due diligence activities focused on assessing the capacity of this institution to manage ADB funds in amounts of up to USD 200 million and effectively control on-lending and repayment of funds.

Tasks performed by IPC experts included:

  • reviewing potential PFI credit policies and identifying risk management policies and practices requiring improvement
  • identifying suitable performance benchmarks as covenants for monitoring PFI performance, including those prescribed by CBT
  • reviewing credit processes, items covered by credit committees, branch and client visits, in depth discussion of credit review and monitoring processes
  • assessing internal audit plans and quality of audit teams
  • reviewing external audit coverage and items covered in management letters
  • assessing capacity of loan officers and credit departments to: assess SME business plans and current business performance; cash flows and debt service capacity; set appropriate sizes, terms and conditions for sub-loans; and determine demand for loans provided on market-based principles
  • preparing a final report on each PFI and SBFAE with the related recommendations for ADB


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