HISTORY OF THE NATIONAL BANK

1991.

September 7, several days passed since the state sovereignty of Uzbekistan has been proclaimed, and the President of the young state signs among his first documents the Decree 'On the Establishment of the National Bank for Foreign Economic Activity of the Republic of Uzbekistan'.

Just a month later on October 7, 1991 the Bank has starts its operation. The first office of the National Bank is located in Ahunbabaev Street 23. During the first months of operation the Bank develops the main features of its financial policy and strategy, lays down the foundation for its future dynamic development.

The first team of the Bank hardly comprises more than a hundred people, but it is the team of those who hold the same views and, as the time shows, prove to be real professionals of banking.

1992.

Uzbekistan starts building of the independent state in the conditions of disintegration of the dozen-year old economic links and decline of production in the CIS countries.

With good reason this year can be also called the crucial year for the life of the Bank. NBU completes the formation of its basis and turns out to be the largest bank with modern banking architecture in the region of Central Asia. It confronts the tasks of making international settlements, efficient use of the foreign exchange assets of the Government, attracting foreign investments and providing its clientele with a wide range of banking.

During this period of economic transformations loans denominated in foreign currency are used primarily for foodstuff purchases. As a result, the consumer market in Uzbekistan turns out to be protected against the acute deficit despite general disruption of cooperation in the former USSR.

But the Bank accumulating the core part of the foreign exchange resources of the country at the same time opens foreign exchange lending for the production sector. For example, the plant 'Zenith' is granted the loan to organize joint production of color TV-sets with one of the South Korean companies; JV 'SovplastItal' utilizes NBU loans to organize production of plastic goods greatly demanded not only in the CIS countries but also in Europe and Asia.

Servicing of the credits provided by Turkeximbank, Bank Universal (Indonesia), Bank of China, Reserve Bank of India, Union Bank of Switzerland turns into the first testing of the Bank's reliability. Foundation for cooperation with the Eximbank of the USA, Ausfurkredit Gezellschaft (Germany), SACE (Italy) is being laid.

By developing close relations with the international financial institutions, the Bank facilitates the implementation of the effective financial policy of market transformations in Uzbekistan. NBU is actively working with the experts from the IMF, World Bank, IFC and CEC.

A solid basis for fruitful cooperation with the EBRD has been laid. The Government appoints R.Azimov, the Chairman of the Board, the EBRD Governor from Uzbekistan. Uzbekistan is the fourth CIS country whose strategy has received the approval of the EBRD.

The Bank installs the 'Reuters' Agency equipment enabling it to get the operational information from all over the world and perform operations in the world commodity and money markets, securities and precious metals markets. Using this information the Bank performs time operations, forward transactions, swaps, options and etc. The month of March has given a start to dealing operations.

NBU is actively raising money on the deposit accounts of the enterprises.

The Bank makes around 95% of international settlements. This predetermined the development of the network of correspondent relations with the major banks of the world. By the end of the year this network has comprised 83 foreign banks, including 5 with 'AAA' rating.

Prompt accomplishment of mutual settlements of the clients the Bank lays out the foundation for joining the international SWIFT system which will enable the Bank to take several minutes to transfer payments to any point throughout the world.

Every fifth employee of the Bank gets training at the leading banks of the world. Twenty-six specialists of the Bank participate in the international banking seminars. The Bank finances education of 13 students at the USA universities.

The first year of the Bank's operation proves that a new dynamic bank has entered the post socialist financial arena to claim for the leadership in the financial markets of the country and the region in the nearest future.

1993.

For the economy of Uzbekistan this year is marked with the adoption of the State Program aimed to deepen denationalization and privatization processes, provide protection of private property and development of entrepreneurship.

After the collapse of the uniform ruble zone, Uzbekistan, on November 15, issues into circulation the interim monetary notes- Soum-coupons.

Like the previous year, 1993 is the year of the first steps of the Bank. Simultaneously, this year might be regarded as the richest time in the history of the Bank from the point of view of the events that to a great extent have predetermined the areas of NBU development and its current image. This is the year of the first significant achievements of the Bank.

The capital of USD 200 million, paid in by the Cabinet of Ministers of the Republic of Uzbekistan, ranks NBU on a par with the most capitalized banks of the former USSR.

In the history of the Bank this year is also remarkable for the outstanding events that have had great implications for the history of the banking and finance system of the country. First and foremost, it is the international banking conference 'Uzbekistan and International Capital Markets: Prospects of Cooperation' organized and held by NBU in Tashkent with the participation of 70 largest banks, industrial companies and international financial institutes of the world. President of Uzbekistan, Islam Karimov, takes part in its work. The conference provides the international financial community with the opportunity to learn about the enormous natural and economic potential of Uzbekistan. And NBU, the host and the initiator of this forum, has won the international recognition and reputation.

It is symbolic that in the course of the conference a capsule has been laid in the foundation of the new premises of NBU. It reads, "On the second anniversary of proclamation of independence of the Republic of Uzbekistan and establishment of NBU the foundation stone of the building of the National Bank's Board was laid here. September 6, 1993". That was the start of the construction of the new many-storied building of the Bank complying with the highest international standards.

The Regional Banking Training Center (RBTC) opens its doors during the conference. NBU is among the RBTC founders together with the EBRD, CEC, Government of Turkey and a number of banks from Uzbekistan, Kirgizistan and Tadjikistan. This Center has been playing an important role in training banking specialists in Central Asia.

Yet another important event for Uzbekistan is the opening of the first EBRD credit line for USD60 million to support small and medium-sized businesses. It is the credit line that initiated a number of programs for SME investment projects in Uzbekistan financed by the leading IFI. These projects are important for the formation of a new class of owners in the country.

Credit activity of the Bank grows substantially. Thirteen largest banks of the world opened credit lines for NBU against the guarantees issued by the insurance agencies from Germany, USA, Switzerland, France, Japan and other countries. Structure of the Bank's credits reflects the progress made by Uzbekistan in the implementation of the reforms and stabilization of the economy. If in 1992 the percentage the imported foodstuff finance remains very high, 1993 witnesses rapid growth of finance allocated for import procurements of the equipment.

Another landmark in the life of the country is left by the provision of a loan worth of USD105 million, by 13 first class banks of the world and the EBRD, to finance the project of JV "Newmont-Zarafshan" for the extraction of gold. The fact that the largest USA Company 'Newmont Mining' has invested its capital, introduced the up-to-date technology in the economy of the country, and the largest banks have invested their capital and granted credits to our enterprise has played a very important role in the strengthening of the international reputation of Uzbekistan. The International banking community has recognized the project to be the best in the category of the Best Project Finance for 1993.

NBU keeps on the promotion of cooperation with foreign banks. Correspondent relations have been already established with 120 banks in 35 countries of the world, including the CIS banks from Russia, Ukraine and Kazakhstan.

The Bank joins international systems of financial telecommunications SWIFT and "VISA International". For the first time in its history NBU has undergone the international financial audit carried out by the Ernest & Young Company that got this right having won the tender conducted by EBRD. The audit results made it possible to fairly assess strengths and weaknesses of the Bank and to identify the ways of its further enhancement.

Every third employee of the Bank has gone through training in the foreign banks.

1994.

This year has every reason to be regarded as a landmark on the way of deepening economic reforms in the country. On July 1, the national currency of the Republic of Uzbekistan - Soum- is introduced and put into circulation. The political importance and economic expediency of this step is very high.

Focus of the economic policy of the Government shifts to the development of basic industries, curbing of the inflation and achievement of macroeconomics stability. Sustainable growth has been displayed by the fuel and power complex, light and food industries and agrarian complex. The inflation rate decreases twice as much; the State Budget deficit makes up 3.3% of GDP.

Providing support to the national currency, the Cabinet of Ministers adopts decrees and resolutions aimed to enrich the domestic market, to support production areas, import-substitution and export-oriented productions.

NBU aims its credit policy, primarily, at supporting priority sectors of the economy, small and medium-sized private businesses.

Large credits denominated in foreign currency are granted for the hotel constructions in Tashkent, to the National Aviation Company 'Uzbekiston Havo Yullari', to the Navoi Metallurgical Mining Mills, for the procurement of the equipment for the gold extraction complex, and credits for the procurement of the materials for the automobile plant construction.

The largest volume of credits in terms of national currency has been granted for the development of light and food industries, machine building enterprises, producers of construction materials, agriculture, transport, tourism and medicine.

NBU opens financing for over 20 large projects and the percentage of SME projects is substantially growing. Sources of finance are presented by both Nub's own funds, internal resources and the credits from the banks of the USA, Japan, Great Britain, Germany, France, Switzerland supported by their export credit agencies.

Basic agreements are signed with the German bank KfW and the AKA consortium of German banks. Within the HERMES insurance framework, letters of credit are opened to implement investment projects in the telecommunications area, in textile industry and health care.

The Bank is steadily holding the leading place in the country in operations with cash foreign exchange, traveler's' checks, credit cards offered to enterprises of all types of ownership and to the individuals. NBU successfully cooperates with 'Thomas Cook', VISA, 'American Express', 'Citicorp', Bank of Tokyo, Bank of America, 'Master Card' in terms of introduction of plastic cards and traveler's checks in Uzbekistan.

Wide correspondent network, mostly the first rate banks, ensure the Bank's servicing of 95% of the international trade turnover of the country. Correspondent relations have been established with 160 banks in 35 countries of the world.

An important stage in the formation of the insurance market in the country is the joint venture establishment of 'UzAIG' Company by NBU and the American International Group, the largest US Company providing insurance against commercial and industrial risks. 'UzAIG' renders services to such large companies like 'Coca Cola', 'UzBAT', 'Zarafshan-Newmont', the Central Asian Fund of Entrepreneurship Support and others.

This year becomes the turning point in the upgrading and updating of information technologies. The Bank purchases the software from such firms as 'Microsoft', 'Lotus' and 'Computer Associates', establishes the links with the information services of REUTERS BUSINESS BRIEFING and UUCP e-mail. Contract with Digital Equipment Corporation is signed to carry out the complex automation of the Bank. Implementation of this project makes the Bank one of the first banks in Central Asia that have introduced complex computerization of their operations.

'Ernest & Young' once again confirms the reliability of the balance sheet and of the credit portfolio of the Bank.

NBU confidently enters in the world banking system and consolidates its advanced position therein. 'The Banker' ranks NBU on 1993 performance as 824 among the Top 1000 largest banks of the world and 139 among 200 leading banks of Asia.

Establishment of the Picture Gallery added a new aspect to NBU activity. The Bank sets up the goal of preservation of the cultural heritage of the country and rendering support to the talented personalities.

1995.

This year holds a special place in the history of independent Uzbekistan as the time of transition to the second stage of full-scale reforms in building market-based open democratic society. It is the turning point in overcoming recession, ensuring production growth and macroeconomics stabilization, revelation of a steady trend towards economic sustainability and political stability.

For NBU this year is one of the most fruitful. It is proved by the stability of balance sheet and credit portfolio of the Bank. The balance for the year has grown by 1.4 times, income by 4.7, capital by 1.4, reserve and insurance funds by 7 times. This ensures financial reliability and stability of the Bank.

It is not by chance that the 1995 performance results of the Bank have been recognized by "The Banker" magazine, and NBU has been ranked among the largest 50 most reliable banks of the world with the BIS ratio of 97.18. Bank's reputation of a serious partner fosters establishment of correspondent relations with 210 foreign banks and 42 CIS banks.

The Bank services 42 large projects for the amount of financing over USD800 million.

At the same time the Bank provides services to 14.6 thousand clients comprising the largest domestic companies, joint ventures and subsidiaries like 'Zarafshon Newmont', 'UzBAT', 'Coca Cola', 'SovplastItal', 'UzDaewooElectronics', 'UzDaewooAuto', 'Uzdunrobita', representative offices of foreign firms: 'Siemens', "Hoehst", 'Textima', 'Alcatel' (Germany), 'Shell', 'Cargill Enterprises Inc', 'Rank Xerox' (Great Britain), 'Finagrain', 'Stahel' (Switzerland), 'Safinfra', 'Schambon' (France), 'Berngeringelfein' as well as domestic and foreign banks and small and medium-sized business firms.

By the end of this year the Bank succeeds to increasing the share of credits utilized for equipment and technology procurements by 2.3 times.

In March the Bank concludes the credit agreement to finance construction gas-compressor station for the Kokdumalak oil and gas condensate deposit extracting over 2.5 million tons of gas condensate. The US Eximbank, Eximbank of Japan, and 'Morgan Guarantee Trust' Company (USA).

Another large project finances the Bukhara Refinery construction. To fund this project credits have been attracted from the Chase Manhattan Bank, Credit Commercial de France, Paribas and Eximbank of Japan.

Efficiently utilized are the credit lines opened within the framework of basic agreements between NBU and KfW and those of AKA and NBU.

Endeavoring to develop tourism infrastructure NBU and Berliner Bank AG co-finance the hotel 'Shodlik' renovation into a five-star hotel.

The following projects are financed within the framework of the EBRD credit line for the support of small and medium-sized private businesses: production of kitchen utensils with Teflon coating at JV 'Asia-Chem', technical refurbishment of the JSS 'Fayz' for production; arrangements for hides processing and subsequent production of sheepskin coats at JV 'Kasmir Deri', extraction of marble and production of marble tiles at JV 'Urgut-Lada-Marble', and etc.

The Bank keeps on the expansion of its correspondent network. The volume of international settlement grows within the year by 2.7 times, the volume of documentary operations by 1.8 times.

In terms of average limit of expenditure per one 'VISA Classic Debit' cardholder Uzbekistan takes the second place among the CIS countries after Russia. The Bank issues discount cards of International Air Passengers Association (IAPA).

System of automation of banking operations and the 'Winter Partners' company software IBS-90 is introduced to enable the Bank to switch to a new accounting methodology and a new chart of accounts complying with the international standards.

Being one of the key financial institutions of the country, NBU actively participates in the formation of the financial sector and gets involved in the establishment of a number of commercial banks, 'Madad' Insurance Agency, the first leasing company in the country - 'UzbekLeasing International' that is a joint participation of NBU, IFC, EBRD and Maybank.

Establishment of the Uzbekistan Banks Association initiated by NBU has become a historic event for the banking system of Uzbekistan.

The Bank meets its fourth anniversary being a well-established financial institution with clear-cut approaches and priorities in its activity.

1996.

This was the year of the 5th anniversary of the country's independence, the year of successful completion of the second stage of market reforms that resulted in laying the economic basis for the in-depth institutional market transformation, macroeconomics stability and economic growth assurance.

Country's industrial production growth rate makes up 6%, inflation rate decreases by tow times, and the State Budget deficit does not exceed the acceptable level of 3.3 % of GDP.

Bank's balance grows by 1.85 times, credit portfolio by 1.85 times and the number of the customers increases over 1.5 times.

NBU's clientele base, till recently representing export-oriented areas of industries, expends due to small and medium-sized enterprises and reflects the general tendencies of economic development of Uzbekistan.

The volume of loans in terms of national currency is substantially growing. The largest credits are provided to Navoi Metallurgical Mining Mills, to oil industry companies, to fruits and vegetables processing enterprising, State Joint Stock Society 'Uzbemebel', to the Main Department of Capital Construction 'Tashjilinveststroy' and others. The Bank lends over a thousand small and medium-sized private enterprises.

During this year NBU finances new projects in the priority areas of the economy of Uzbekistan. The largest of them are the following:
q delivery of 'Case Corporation' Company's tractors and harvesters;
q construction of the five-star hotel 'Metropol' in Tashkent;
q production of a wheel tyre cord at the Fergana Plant of Chemical Fibers;
q production of the enriched kaolin at the Joint Stock Society 'Coal' in Angren;
q construction of the national segment of the TransAsia-European optical fiber communications line;
q development of telephone communications in Tashkent and Samarkand.

All in all, the Bank finances 74 projects totaling USD2.77 billion including those financed through the credit lines funds provided by banks, insurance companies and international financial institutions of the USA, Japan, France, Germany, UK, Belgium, Korea, Czechia, Turkey, Switzerland, India, EBRD and ADB.

Chase Manhattan Bank opens new credit lines to finance the procurement of 'Case' tractors and harvesters and leasing of 'Boeing 767' airplanes. Generale Bank (Belgium), Eximbank of Japan open credit lines to finance Fergana Refinery, Turkeximbank finances production of vehicles for various purposes at JV 'SamKocAuto' (39 million) and completion of 'Intercontinental' Hotel construction.

The first EBRD credit line has been fully utilized.

The Bank is actively participating in the corporatization of TAPC, the largest CIS aviation production.

On March 28 NBU commences its activity in domestic securities market. In terms of volume operations in this market the Bank becomes the first largest operator retaining over 26 % of the volume of the Government Treasury Bonds market.

Accounting for the interests of its clients the Bank establishes correspondent relations with the banks of Singapore, Kuwait, Australia, UAE, Saudi Arabia and Brazil. Special consideration is given to the reliability of correspondent banks. The network covers 328 leading banks in 64 countries of the world.

This year has become the period of extensive regional development. Seven new affiliates are opened under the regional branches of NBU.

'Asia-Invest' Bank starts its operations in September. It is a subsidiary bank NBU opens in Moscow to expand its activity in the financial markets of Russia.

To enhance the services provided to VISA cardholders, the Bank, in addition to IAPA cards, starts issuing 'Priority Pass' cards. This entitles the cardholders to VIP services at over 100 largest airports of the world.

NBU steps over the lowest benchmark criteria of VISA International for 'Small Member in Emerging Markets' and, thus, joins the group of large banks having substantial turnovers from the point of view of international standards.

The Bank commences the introduction of the system of non-cash settlement in terms of national currency applying Chip or Smart Cards. A network of twenty largest shopping centers, supermarkets and service enterprises accepting cards for goods (services) payments is formed in Tashkent to serve 'Soum' Card holders. A network of 50 terminals has been established.

In the Top 1000 banks of the world NBU moves to 696 place.

NBU specialists participate in the international banking seminars and conferences; take training in foreign banks and at the Regional Banking Training Center.

1997.

President of the country, I.A.Karimov, proclaims that this year will be the year of implementation of human interests. It becomes yet another stage in the progressive development of Uzbekistan, radical reformation of the society, its movement towards stability and prosperity. Stabilization of money circulation and reduction of cash issue turn out to be the major results of successful implementation of the key guidelines of monetary policy.

It is a year of dynamic development of NBU. The Bank services around 53 thousands of accounts, that is by 1.6 times higher compared to the previous year. Correspondent network covers 409 banks in 65 countries of the world including those in Europe, America, Asia and the Pacific.

'The Banker' raises NBU to 577 position among the Top 1000 banks of the world.

Bank's business is focused on financing major projects of the country's economy. Using refinance and its own assets the Bank finances 99 project for the total amount of USD 3.14 billion. A number of large enterprises have been put into operation. 'Kokdumalak' gas-chemical complex extracting gas condensate, Bukhara Refinery and a four-star Hotel 'Shodlik' are among them. Within the framework of the ECGD credit line the Tashkent Textile Mills has completed upgrading and renovation of the workshop producing cotton yarn.

Memorandum of Understanding and credit agreements are signed between NBU and Chase Manhattan, Komercni Banka and Czechoslovenska Obchodni Bank, Vceobechni Uverova Banka (Slovak Republic) and the National Bank of Greece.

In May the joint venture Uzbek-Korean Bank 'UzDaewooBank', Uzbek-Dutch Bank 'ABN-AMRO NB Uzbekistan' have been opened. NBU participates in their foundation alongside with EBRD and IFC.

Cooperation with EBRD, ADB and IFC acquires a new qualitative development. EBRD approves a number of projects for USD372 million, including renovation of Fergana Refinery, Syrdarya Hydropower Station and a number of SME projects.

IFC approves funding of five projects for the amount of USD47 million in Uzbekistan, namely, UzCaseMach to assemble cotton and grain harvesters; UzCaseAgroleasing to set up a leasing company, establishment of the JV UzCaseService to support the first two projects; to expand and refurbish the Furniture Production Association 'Fayz' and to set up the joint venture plant UzKorSanoat to produce medical preparations.

Export/import agencies of some countries have decided to provide loans to Uzbekistan via NBU without requiring Government guarantee: COFACE provides up to French Francs 30 million, EGAP society decides to insure loans under USD10 million. To service these credits, the framework agreement has been concluded with Czech Obchodni Banka and HERMES to support via NBU exports financed by the German banks within the total limit of DM50 million.

NBU is servicing seven grants from the Japanese government to supply medical, agricultural equipment and machinery to rehabilitate automobile road through the 'Kamchik Hights'.

Using the insurance security of the USA Eximbank, NBU takes on lease two 'Boeing 767' 300 ER type airplanes and using the credit line of the ECGD (UK) two airplanes of 'RJ 85' type, that have been given on subleasing terms to the Aviation Company 'Uzbekiston Havo Yullari'.

Successful of utilization of the first credit line allow the EBRD to approve the second line to support small and medium-sized private businesses at the amount of USD120 million, of which USD 60 million have been provided to NBU without a Government guarantee.

ADB has approved credit for USD50 million for SME support. To increase export supplies of aviation machinery from JSS TAPC, NBU initiates establishment of the leasing company 'UzAviaLeasing'. and becomes one of its founders.

Since March VISA cardholders are entitled for life insurance against accidents in conformity with UzAIG company insurance program.

For the first time in the country a pilot project on the arrangement of the high-speed radio modem communications has been implemented in collaboration with the German firm 'Bosch Telekom'. The Bank is completing the development of its own INTERNET server.

Trading system 'Dealing 2000' is replaced by 'Dealing 2000-1', that allows to increase the capacity of operations conduct by several times. This enables to use modern types of dealer's workstations: Personal Trader Workstation (PTW) and Cobra.

NBU employees list reaches 3456 persons. Over 300 students from the higher economic education institutions of the country have spent their probation course with NBU.

1998.

This year proved to be one of the most difficult years for the world economy for the past decades. Financial crisis that started in Asia in 1997 spread to Russia and larger countries of South America having become the first global crisis of the system.

Uzbekistan was the only country in the post Soviet area whose macroeconomics indicators have been showing economic growth for the past three years, all under the condition that attention was focused on social challenges of reformation. GDP growth makes up 4.4 %, budgetary deficit constitutes 3.0 % of GDP. Industries encouraging the in-depth structural transformations of the economy are developing most dynamically.

In such conditions NBU seeks to give adequate response to the changes in the state of the market and business environment sticking to previously identified long-term strategic goals. Pursuing well-balanced policy, the Bank works out mechanisms of asset management and with confidence passes through all world financial storms.

The fact that 'Euromoney' magazine awarded the Bank the 'Certificate of the Best Bank in Uzbekistan for 1998 year' - is the prove of NBU's recognition. On the 20th of May NBU becomes a member of the Asian Bankers Association (ABA). This is a great event for the banking system of Uzbekistan.

Correspondent network of the Bank extends to 432 banks.

During the crisis in Russia 'Asia-Invest' subsidiary bank in Moscow plays an especially great role. When most of the Russian banks suspend their operations it does not stop its activity. It continues to service the Uzbek-Russian trade turnover and, moreover, expands its sphere of banking business having improved its financial indicators. By the performance results of the year 'Asia-Invest' bank is rated the 5th in terms of reliability index and gets included into 300 largest banks in Russia.. It fully justifies the timeliness of its establishment and successfully meets all the challenges in terms of support of the Uzbekistan enterprises and safety of their funds in the financial market of Russia.

Within the main areas of credit policy still remains the financing of enterprises of priority sectors and of manufacturing enterprises focusing on the export- oriented and import-substitution products, as well as financing of export/import operations.

The largest volumes of the attracted loans are covered by the insurance of the Eximbank of the USA - 33%, 'HERMES' - 26%, Turkeximbank - 14%, 'COFASE' - 8%, Eximbank of Japan - 13%, and ECGD - 3%.

NBU continues to expand cooperation with the international financial institutions. Most successfully it cooperates with the EBRD. The strategy of the EBRD operation in Uzbekistan for 1998 - 2000 is approved and, following that, its activity in our country expands.

Issues of opening of a credit line to Uzbekistan banks for SME financing and construction of cotton gins and processing plants is being considered together with IFC. In September the ADB Board of Directors approves the project on the rehabilitation of the railroads en route 'Chingeldy - Tashkent - Havast - Jizzak - Samarkand'. And in this project NBU acts as a financial agent.

Large projects are being completed and put into operation. Among them are the textile factories: JV 'PapFen', 'Namangan Textile', JV 'Asnan Textile', JV 'Kasansay-tekmen'; Khorezm sugar plant, Fergana Chemical Fiber Plant, JV 'SamKocAuto' plant producing trucks and medium buses,.

Support of SME under the concepts of economy of Uzbekistan reformation is regarded as a core area of NBU's activity. The Bank carries out active work on the utilization of the international credit lines.
The EBRD credit line (II) for USD60 million and the ADB credit line for USD50 million are in the course of utilization. IFC confirms provision of the credit line worth USD40 million. An agreement has been signed with KfW on the credit line of EURO 15 million.

NBU and 'American Express' are completing the preparatory work to provide settlements for the holders of the 'American Express' plastic cards.

NBU makes large investments into the capital of national export/import insurance company 'Uzbek Invest'. Intensifying its work in the development of SME support infrastructure the Bank participates in the capital of entrepreneur's support fund 'Business-Fund' and increases the volume of its investment to the capital of the entrepreneur's insurance agency 'Madad'.

Development of the network of Bank affiliates has become one of the main areas of Bank's activities during the year. By the end of the year 83 regional affiliates have started their operations.

Personnel training and staff development remain in the focus of the Bank management attention. The leading bank-partners like Deutsche Bank, Commerzbank, Berliner Bank, Sociite Generale and the Chase Manhattan Bank rendered assistance to NBU in the arrangement of study tours for 50 affiliate and branch managers.

1999.

This year confirmed that liberalization and deepening of the reforms is the basis and guarantee of progress for Uzbekistan, the main condition ensuring the solution of economic and social issues. Further economic growth has been provided, financial and monetary system has been strengthened, the GDP has grown by 4.4%, and the budgetary deficit has been reduced to 1.8% of the GDP.

For the Bank the year also proves to become another landmark of sustainable growth. Being an active participant of the transformation process NBU organizes its activity as of a universal bank, which enables it to respond promptly to the demands of the dynamically developing economy of Uzbekistan, to find the reliable sources of profit in the prospective areas of banking.

NBU is consistently developing its cooperation with foreign banks and IFIs.

Extensive international cooperation is evidenced by the fact that the Bank has been visited by over 90 delegations from the financial institutions and industrial companies of nearly all advanced countries of the world.

The Bank concludes a number of credit agreements for co-financing investment projects with the Eximbank of Japan, Citibank, Bank of New York, American Express Bank, National Bank of Greece and Banco Nazionale del Lavoro. To finance the current trade operations without Government's guarantees, the Bank has credit lines opened for the amount of over USD400 million.

Provision of the USD150 million credit line to NBU, syndicated by 9 first class banks and arranged by Societe Generale, is undoubtedly one of the achievements of the year. 'AIG International' and 'Uzbekinvest International', who arranged underwriting of the risk coverage with Lloyds insurance market in London have covered the risk of this deal.

NBU enhances its further cooperation with the EBRD. An agreement is signed for the disbursement of the second tranche of the second credit line aimed to finance SME projects. The Agreement is signed for the opening of the credit line to support export/import operations and cover risk exposure by the banks of the CIS countries for the amount of USD50 million.

Developing cooperation with other IFIs, NBU receives credit lines to financing SME investment projects from the IFC (Euro15 million) and KfW (Euro15 million).

Role played by the 'Asia-Invest Bank' is steadily growing. Yearly results place the Bank among 200 largest banks of Russia, and the Russian weekly 'Money' ranked it 145. The reliability index gives it the 17th place, and liquidity ratio - respectively the 7th place.

There expands the cooperation with Asian Bankers Association, and the basis is laid for cooperation with the Association of Development Financing Institutions in Asia and the Pacific.

Major investment projects financed by the Bank present the organization of production of liquid chlorine, hydrochloric acid and caustic soda, upgrading of potassium chlorine and magnesium defoliant chlorate at the Fergana 'Azot' Production Association, delivery and installation of the equipment to produce pulp at the Yangiyul Pulp and Paper Factory, lease of two 'Boeing 757-200' airplanes and spare parts thereto for 'Uzbekiston Havo Yullari', supply of quarry equipment for the Kyzylkum Phosphor Plant producing phosphor flour, and etc.

In the SME t portfolio structure 50% of the borrowers are represented by private enterprises with foreign participation, 21% - by small private enterprises, 18% - by joint stock societies, and 8% are collective enterprises.

The Bank is building up the investment portfolio and raises the efficiency of its investments in corporate securities.

'Zamonaviy Mulkdor' product, i.e. the electronic system of inter-bank securities trading via the Bank branches, has been introduced. This system enables the Bank to provide the firms and general public with the modern forms of investment activities.

This year appears to be the turning point in terms of introduction of the Bank's plastic cards. The project is being implemented for joining the automated system of the Bank to VisaNet, which makes it possible to carry out settlement by VISA cards through the terminals. A new product, VISA Electron Card, having the very high degree of reliability and security as well as low cost due to electronic processing of operations, has been introduced.

'Tijorat' National firm and the Bank offer the Soum Card holders the Discount Cards for purchases of goods and services at 200 supermarkets, restaurants, fitness centers and tourist agencies.

One of the challenges for the Bank is the preparation of the information systems for a smooth entering into a new millennium, provision of system compatibility due to Y2K, comprehensive testing of the hardware and software. Recovery issues for the Bank's system are thoroughly worked out to protect the information systems from possible failures, if any.

'Euromoney' recognizes NBU the best bank in Uzbekistan and Central Asia. In the Top 1000 largest banks of the world the Bank goes up from 503 to 463 having improved its position by 40 points. It also holds the 67th place among the banks of Asia.

NBU is the first Uzbek bank awarded the rating of the Thomson Financial BankWatch Agency. These are the highest ratings among the CIS banks. That facilitates the growth of the investor's confidence in the Bank and Uzbekistan at large, enabling the increase of volume of trade finance facilities and operations with the leading banks.

In conformity with the Program of Reformation of the Uzbekistan Banking System aiming to deepen the processes of bank's privatization and denationalization in the country, there has been envisaged to undertake corporatization and sell 40% of NBU shares to foreign investors.

Privatization of NBU, the largest bank of the country, is an important stage on the way of further liberalization of the economy meant to attract foreign investors, promote competition in the banking center and introduce the system of corporate governance compliant with the OECD principles of corporate governance.

2000.

The President of the country Islam Karimov sets up the priorities of further reformation of the economy aimed to deepen economic reforms, privatization process and formation of the class of real proprietors, ample involvement of foreign investments, creation of favorable conditions for SME, increase of the export potential of the country and provision of the extensive integration of the economy with the international economic system.

Country's GDP has grown by 4%, deficit of the State Budget accounted for less than 1% of GDP.

Bank's new largest investment projects present the renovation, technical refurbishment and equipment procurement at the JV 'Kabul-Fergana Co'; organization of the Center for technical maintenance of the airplanes of western make on the basis of the Plant # 243 SA; construction of the 'President-Hotel' in Samarkand and renovation of the 'Khorezm' in Urgench; widening of automobile model line and production of 'Matiz' car at JSS 'UzDaewooAuto'; and organization of acid batteries production at JV 'UzExide'.

Volume of loans to the private sector of the economy increases by 11 times. The EBRD (I, II), ADB, KfW and IFC credit lines are utilized to finance 110 projects with the total cost of USD297 million and credit volume of USD185 million.

The Bank starts the implementation of micro lending programs for individual entrepreneurs, dekhkan and family farms.

NBU is closely involved in the development of the stock market in Uzbekistan and organizes the issue of shares of one of the largest enterprises in the country.

Expanding the range of services offered to the public, the Bank increases the number of its depositors by 1.5 times and surpasses the People's Bank, the successor of the USsSR's Savings Bank, the largest bank specializing in retail banking, and becomes the second to none in Uzbekistan in terms of raising individual Soum deposits.

Applying Smart-technology DUET the Bank accomplishes the creation of multi-issuing payment system. All holders of the NBU plastic cards of VISA Classic and VISA Electron, Soum Cards, Discount Cards IAPA, Priority Pass and DSO are provided with the NBU paid insurance policies from the joint venture company UzAIG.

The international community has duly appreciated dynamic and sustainable operation of the Bank. In the rating of the Top 1000 largest banks of the world carried out by 'The Banker' magazine, NBU occupies the 429th position, and its BIS reliability index is ranked now among the top 10 most reliable banking institutions of the world.

Rating Agency 'Thomson Financial BankWatch' again confirms the NBU's issuing and short-term ratings as IC - B/C and LC - 1 respectively. These are the best ratings among all CIS banks.

'Euromoney' and 'The Banker' reconfirm their recognition of NBU as the best bank in Uzbekistan and Central Asia.

Pre-export financing of gold exports and financing of the procurement and delivery of the harvesters and tractors from 'Case' Corporation concluded by NBU with Societe Generale, as well as the deal with Banco Nazionale del Lavoro and Citibank on the financing of the supply of the line for flat and automobile glasses production, have been included in the number of the Best Deals of the Year .

At the Annual Banking Congress of Asia and the Pacific NBU's 'Program for SME Development' has been highly appreciated by the International Financial Community. The Bank becomes the prizewinner in the category of 'The best program for financial development' for its contribution to the development of private sector in the country.

NBU becomes a member of the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) that unites the banks and other financial development institutions of the countries of Asia and the Pacific. NBU hosts the session of the ADFIAP Board of Directors in Tashkent.

Within the framework of entrepreneurship support in collaboration with ADFIAP the National Bank starts implementing an international project of SMECENTER.COM to provide full range of information services to the NBU's customers via Internet.

The Bank is working upon the development of the strategy, privatization schedule for the Bank and selection of its financial consultants.

2001.

Priority development areas of country's economy have been identified as provision of macroeconomics stability, consistent structural transformations in the national economy, formation of multi-mode economy lead by the private property, further liberalization of foreign economic activity and foreign exchange market of the country.

On the eve of the 10th anniversary of independence the following projects have been put into operation as a striking proof of the Republic achievements:

- Shurtan Gas-chemical Complex producing 125 thousand tons of polyethylene per year and processing 4.2 million tons/year of raw gas.
- Kizilkum Phosphoric Mills serving to increase the output of concentrated phosphorus concentrate from 300 to 600 thousand tons/year.
- Fergana Plant of Furan Composites producing cellulose from lint (30 thousand tons/year).
- Production Corporation 'Navoi Azot' producing caustic soda (with the production capacity of 26 thousand tons/year) and chlorine (17 thousand tons/year).
- JV 'Kabul Fergana Co' - renovation and technical re-equipment of production of cotton yarn (with the production capacity of 18.5 thousand tons/year) and cotton fabric (with an output of 12 thousand meters/year).

Uzbekistan has been visited by the President of the Asian Development Bank, delegation of the EBRD Board of Directors, officials from the Export/Import Bank of the Chinese People's Republic, senior executives of KfW. In the course of negotiations new prospects for the promotion of cooperation with Uzbekistan, including NBU, have been outlined.

Commercial cooperation with banks is deepening. Correspondent network of the Bank includes 500 banks from 66 countries of the world. By the midst of the year leading foreign banks have opened trade finance credit lines for NBU for the amount exceeding USD 520 million.

In the course of the visit of the President of the Republic of Uzbekistan, Islam Karimov, to Germany cooperation of NBU with German banks is given a new impetus for development. The Bank signs a number of agreements with Bank Gezellschaft Berlin, with DG Bank and supplement to Basic Agreement with AKA. An agreement was reached with DG Bank on cooperation in the SME development sphere, studying DG Bank's experience in cooperative financing of small and medium-sized enterprises in Germany. NBU signs the Memorandum of Understanding with Deutsche Bank envisaging Deutsche Bank's participation in the process of restructuring and further institutional development of NBU.

During the visit of the delegation of the Republic of Uzbekistan to Austria the Memorandum of Understanding has been signed between NBU and Raiffeisen Zentralbank Osterreich. It outlines the areas of further cooperation, in particular, implementation of joint projects concerned with small and medium-sized businesses in Uzbekistan, RZB participation in the privatization of the real sector of the economy in short-term and medium-term projects aimed to promote trade and commercial relationship between the Republic of Uzbekistan and Austria.

Rating of the Top 1000 largest banks of the world carried out by 'The Banker' magazine, changes NBU position 429 to 403.

The Annual Banking Congress of Asia and the Pacific recognizes NBU's product 'Zamonaviy Mulkdor' - the electronic network of the securities sale/purchase through the Bank's branches - the prizewinner in the category 'The Best Product Innovation' for the contribution to the development of the country's stock market.

Uzbekistan is preparing to celebrate its 10th anniversary of independence on the 1st of September - the first eminent date in the modern history of the country.

NBU is accomplishing the preparation for holding and hosting the Annual Meeting of the Asian Bankers Association (ABA) on September 6-8 in Tashkent during when on September 7 the National Bank will become ten years old.

The ABA forum will give the wide range of the representatives of the international financial community an opportunity to see for themselves the achievements of the country gained during the years of independence. It will give a strong impetus to the activation of cooperation of the Uzbekistan banks with the financial institutions of the Asian and Pacific countries.

Decision taken by such a reputable financial institutions as ABA to hold its annual session in Tashkent is yet another proof that the Uzbekistan achievements in carrying out its economic reforms have got the international recognition and appreciation. The baton of such high level forums will be accepted by the annual session of the EBRD Board of Governors that will be held in Tashkent in 2003.

2002.

NBU's position in the international financial markets and in the financial market of the country has been deservedly attested by getting various international awards in 2002. Under the Program of the "ADFIAP Award 2002", established by the Association of Financial Institutions of Development of Asia and the Pacific Ocean for the banks that have implemented the most innovative projects, NBU was recognized the winner in the category «Development of Technologies » for the e-banking product «Remote System of Electronic Service for the Clients» (Bank-client system).

Also, in September, 2002, during the Annual Meeting of the International Monetary Fund and of the World Bank Group in the USA, the National Bank of Uzbekistan was awarded the "Best Bank of Uzbekistan" for 2002 from "Global Finance" and "Euromoney" magazines.

National Bank of Uzbekisatn represents the Republic of Uzbekistan in various international financial organizations, such as the Asian Bankers Association (ABA) and the Association of Development Financial Institutions of Asia and the Pacific. In September 2002 at the 19th Annual Meeting of the Board of ABA Directors in Seoul, Korea, the Chairman of the Board of the National Bank of Uzbekistan was elected to the Board of Directors of ABA.

The National Bank of Uzbekistan, being an infrastructure-forming institute, actively participates in the formation of banking infrastructure and creation of sound competitive environment. The Bank is the dominant member of the group of SWIFT network users in Uzbekistan, a basic member of the VISA system.

In 2002 the project of the entry of Asaka Bank, the second-large bank in the Republic, into the number of founders of NBU affiliate bank, «Asia Invest Bank» was completed.

The National Bank of Uzbekistan actively creates the basis for further increase of the inflow of foreign investments into the Republic. Thus, during the visit of the official delegation of the Republic of Uzbekistan to the USA on 11-15 March, 2002, the Agreement on the opening of the credit line amounting to USD 55 million was signed with the US Eximbank and Bank of New York on financing projects of small and medium business against the insurance cover of the US Eximbank without the sovereign guarantee of the Republic of Uzbekistan.

So far, for period of 1993-2002 the National Bank of Uzbekistan within the framework of foreign credit lines, centralized and own resources have financed 279 large investment projects with the total loan requirement of USD 3987.72 mln.

In 2002, the National Bank of Uzbekistan concluded 14 new loan agreements with foreign banks for 10 projects in such areas like public health services, agriculture, light industry and TV and radio broadcasting.

So far, within the framework of the foreign credit lines the European Bank for Reconstruction and Development (EBRD) (I, II), Asian Development Bank (ADB) (I, II), Kreditanschdalt fur Widerafbau (KfW), International Financial Corporation (IFC), OPEC Fund and a number of export-credit agencies, 152 projects totaling USD 388 million have been accepted for financing, of which loan amount comprises USD 231 million.

2003.

New banking products and services offered by the Bank in 2003 are designed to satisfy the banking needs of private entrepreneurs and population whose assets are being channeled into the banking turnover.

National Bank of Uzbekistan is a leading corporate bank in the country. A clear trend towards the increase of the share of small enterprises (39%) in the structure of newly-attracted clients was observed in 2003.
In the beginning of 2003 the Council for Corporate Client Relationship Development was established within the Bank.

Project finance is one of the most complicated areas of banking activity. National Bank of Uzbekistan signed a number of loan agreements with foreign banks to finance projects directed towards development of municipal economy, transportation, mining industry, agriculture and textile production.

The growth of population’s earnings led to an increase in customer demand and retail trade turnover. Improvement of confidence in banking system has stimulated the rise in organized savings. These factors stipulated the Bank’s interest to the development of retail business and repeatedly proved the correctness of the strategy direction, oriented on the retail services market.
In 2003 the Bank started extending the loans for the purchase of UzDaewooAuto automobiles.
In the end of 2003 NBU institutions started the distribution of the new type traveller’s cheques - «American Express» savings cheques, in accordance with the signed agreement between American Express and National Bank.

One of the directions of State program on economic reforms in 2003 is the realization of complex measures in the further development of Stock market of the country. Through attracting broad circle of investors, including medium and small companies, bank developed new banking product “Zamonaviy Mulkdor” – electronic system of securities trade.
In 2003 National Bank implemented new kind of banking services – underwriting corporate bond issues.
The underwriting debut of the Bank has been highly acclaimed by the participants of Uzbek Stock Exchange, as a result of which National bank was awarded “The best underwriting company” award for 2003.

2004.

In 2004 the National Bank attracted over US$ 368 million and EURO 100 million in foreign loans to finance priority sectors of the economy. These include credit lines of the Export-Import Bank of China, Islamic Development Bank and of a number of the European banks.

Moreover, for the first time in the banking practice in the country, the National Bank opened a revolving credit line for US$ 60 million to its subsidiary JSC “Asia-Invest Bank" in Moscow to support exports of finished goods from Uzbekistan to Russia.

The National Bank concluded a number of agreements with foreign banks for projects aimed for the development of utility services, transportation, mining and metallurgical industries, agro-industrial complex and textile production.

It is necessary to note substantial expansion of partnership relations between the National Bank and the Islamic Development Bank (IDB) in 2004. The IDB provided the National Bank with US$ 15 million facility to finance investment projects in the private sector of the country.

National Bank’s customer relations policy in 2004 was directed towards increasing the volume and stability of business through expansion and diversification of the customer base and offering competitive banking services.

The National Bank continues to maintain its leading position in the retail services market, preserving priority pricing conditions and offering a wide range of deposits both in terms of national foreign currencies.

Since 2004, the National Bank has been offering a new product - “American Express Cheques” for home storage.

The year 2004 turned out to be a crucial year in the development of non-cash card settlements in thecountry. Decree of the Cabinet of Ministers dated September 24, 2004 became a very important factor in popularization of cards among the population.

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April 2005, Tashkent