“We want to buy a small bank in Portugal”

After acquiring a bank, a brokerage and many other companies in Kazakhstan and the USA, Timour Turlov, CEO of Freedom, intends to buy a bank in Portugal to increase growth in Europe.

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1. What are Freedom’s plans for Portugal this year?
- 1.1. But will Freedom’s growth in Portugal only be around Freedom24 or will they do the same as they did in Kazakhstan, where they grew through a very audacious strategy of acquiring companies in different sectors?
2. Do you want to buy a bank in Portugal?
3. Like this?
- 3.1. Do you think this happened because Freedom is a company based in Kazakhstan?
4. And what have you done about this matter?
5. How do you hope to convince European authorities?
- 5.1. Is the idea that the number of people involved in the credit process and other operations becomes smaller and smaller?
6. Subscribe to ECO Premium

Timour Turlov was born in Russia 36 years ago, but he identifies Kazakhstan as his country. It’s not by chance. In addition to having Kazakh citizenship since 2011 and disagreeing with the Kremlin’s current policy, it was in this Asian country that Timour Turlov grew his Freedom Holding, which he founded in 2008 before finishing his university course in Economics through an audacious strategy of acquiring companies from different sectors.

Today, Freedom trades on the Nasdaq technology exchange in New York, with a market capitalization of almost 4 billion euros and is present in more than a dozen countries. “We acquired many startups in our country for a very, very reasonable price and we helped build these startups over the last five years and then integrated them successfully, without disrupting their activity”, Timour tells ECO in an interview in New York.

Portugal is one of the European countries where Freedom has a presence through its broker FreedomFinance (registered in Cyprus) and the financial asset trading platform for retail investors, Freedom24. However, Portugal’s reduced exposure in Timour’s company portfolio, which in the last five years has purchased several companies in Kazakhstan and the USA, may soon change with Freedom’s intention to acquire a Portuguese bank next year.

“We have already analyzed the market and other elements to understand what is necessary to obtain a new license or acquire a small bank in the country, to build the same platform as we did in Kazakhstan“, says the founder and CEO of Freedom Holdings, who already has a residence permit in Portugal.

What are Freedom’s plans for Portugal this year?

The number of customers [da Freedom24] It is growing. We are making our marketing more efficient. We are making our platform more robust and better for our Portuguese customers. We are happy to be able to provide great content to our customers and traders on our platform. Feeds news, research, all available in Portuguese, for example, which is also driving our growth. We are also trying to improve our artificial intelligence models to translate ‘breaking’ news in real time to allow our Portuguese customers to access news about US companies in Portuguese.

But will Freedom’s growth in Portugal only be around Freedom24 or will they do the same as they did in Kazakhstan, where they grew through a very audacious strategy of acquiring companies in different sectors?

We have a different degree of maturity of our business in different countries. In Kazakhstan, the level of our operations is more mature. In Europe, it’s like we’re under a brokerage license, but we’re serving retail people and we really want to acquire a bank.

Do you want to buy a bank in Portugal?

Yes, maybe next year.

We have had some preliminary conversations with regulators about the requirements we have to present to operate in the market as a bank (…) but we have not yet begun the process of specifically identifying which institution we intend to acquire.

Do you already have a Portuguese bank in mind?

We have already analyzed the market and other elements to understand what is needed to obtain a new license or acquire a small bank in the country, to build the same platform that we did in Kazakhstan so that, in addition to being a broker, we can also manage savings, make payments, granting credit, everything a bank can do.

Have you had any conversations with Portuguese bankers or people linked to any of the potential banks you intend to acquire?

No not yet. We did some research on who’s for sale, what the balance sheet of these banks looks like. We have had some preliminary conversations with regulators about the requirements we have to present to operate in the market as a bank, how this process of obtaining approval works in Portugal, but we have not yet started the process of specifically identifying which institution we intend to acquire.

When do you intend to move forward with the purchase of a Portuguese bank?

Probably next year. Then we will be more prepared than we are now.

Regulators, like us, are also not very happy with all the noise surrounding Freedom that has occurred following the allegations in the Hindenburg Research report.

What difficulties do you expect to encounter in this process that could hinder or block the completion of the deal?

The biggest difficulty will be obtaining regulatory approval in the current period, because even if we can move forward with negotiations with different players, this will not be the biggest problem. The biggest problem will be obtaining regulatory approvals.

Like this?

Regulators, like us, are also not very happy with all the noise surrounding Freedom that has occurred following the allegations in the Hindenburg Research report. And, therefore, we also need some time to let the ‘dust settle’, even if we have already proven that we are innocent in this case.

But it’s not just allegations of market manipulation and illegal activities by Hindenburg Research. Freedom is also being investigated by the U.S. Department of Justice and the U.S. Securities and Exchange Commission (SEC) over compliance issues, insider stock moves and a subsidiary offshore linked to sanctioned individuals.

It’s the same campaign, it’s the same people at Heisenberg who did the pitch on CNBC during that time period. And this CNBC article appeared a month after the report was published.

Do you think this happened because Freedom is a company based in Kazakhstan?

It’s complex, but if we were a company from Germany, the United Kingdom or the USA it would be more difficult for these allegations to happen. And this happens because no one expects anything strong to come from the part of the world where we are, and the world also doesn’t have the best perception of this region. But of course I hear the criticism when they say that there are many deficiencies in our disclosures and in our reports.

And what have you done about this matter?

We must make our disclosures and reports even more transparent, so that there is less speculation about these issues. Our company has a lot to improve so that opinions are less speculative and so that any speculation seems less visible now. We learned many lessons from this, which led us to build a stronger company, facing this allegation and now correcting some disclosures, trying to better explain how we do our things.

At what point is the US authorities’ investigation into Freedom’s operations?

I don’t know because I never heard anything from the Department of Justice. Our company has not heard anything about the matter.

European governments are not so open to letting, for example, banks access most databases. But I believe that we have finally found the right way to gain the trust of European authorities.

Were they never notified by the US Department of Justice or the SEC?

No, never. We even tried to contact them, but we didn’t get any information either. feedback about the subject. Everything is very strange about this “investigation”, even if it even exists. It appears that the authorities just received a tip from a whistleblower who possibly caused them to obtain the report from Hindenburg and the authorities are checking to see if there is any violation on our part.

But it is not just these accusations of improper practices that could hinder Freedom’s expansion in Portugal and other European markets. Freedom is increasingly a data company and not just a financial company, which has grown by acquiring companies from different sectors and using customer data from each to support the others. Don’t you think there will be big problems in Portugal and other European countries with this business model, at a time when Brussels is taking greater steps in the protection of personal data?

I am sure that this is the way to survive and compete in this world. It is very difficult to survive as an independent company. But by having access to a lot of data you can reduce the cost of customer acquisition, make the customer more loyal, and arrive with the right offers at the right time. In Kazakhstan, we have actually started to benefit from this. We have a lower customer acquisition cost.

Do you hope to have the same open door in Europe as you did in Kazakhstan or do you anticipate many difficulties?

European governments are not so open to letting, for example, banks access most databases. But I believe that we have finally found the right way to gain the trust of European authorities, also showing what kind of results we can achieve by having this access and how we can actually manage all cybersecurity.

How do you hope to convince European authorities?

For example, in our credit decision process, no one person reviews customer applications. It is automatically processed by our algorithms. Even our people do not have access to this data. It’s just the algorithms analyzing the data and making decisions and people are not involved, not even in accessing this data as a normal bank operation does.

Is the idea that the number of people involved in the credit process and other operations becomes smaller and smaller?

Yes. We are maintaining and processing a lot of data, but we are trying to process the results without any human involvement in this process. Now in our bank, many fewer people have real access to personal data resources than before, because we don’t need people to process data. This maintains an even higher level of confidentiality. Perhaps that could be another angle, which we can discuss with regulators in Europe to discuss how the entire economy can benefit from access, and how we can manage all the necessary cybersecurity and data protection to find the right balance.