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Kazakhstan: Halyk Bank makes a clean break with the past

Share buyback latest sign of financial health; Lending still lagging income growth

Kazakhstan’s leading retail lender, Halyk Bank, has completed a landmark share buyback that signals that at least one of the country’s banks is well on the way to recovering from the global credit crunch.

In mid-March Halyk announced that it was buying back a near 20% stake in the bank that the authorities in Kazakhstan purchased in March 2009 as part of a bank stabilization programme coordinated by sovereign wealth fund Samruk-Kazyna.

Of the roughly 260 million shares held by Samruk-Kazyna, 213 million have been bought by Halyk Bank itself, with the balance bought by the bank’s majority shareholder, Almex group.

As a result of the transaction, Almex’s shareholding has been boosted to roughly 69% from 54%, while the overall free float of the bank, which is listed in London as well as Almaty, has increased from 21% to about 25%. The total cost of the transaction to Halyk was KT39.9 billion ($274 million), while Samruk-Kazyna netted an annual return of 15.75% on its two-year investment, earning KT5.9 billion.

Umut Shayakhmetova, Halyk Bank’s chief executive, says that the share buyback is the latest stage in the repayment of government funds over the past year and, like earlier transactions, was completed ahead of schedule, with Samruk-Kazyna being repaid well before the five-year period initially contemplated in 2009.

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