Kazakhstan: The rise and fall of a banking sector
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Kazakhstan: The rise and fall of a banking sector

Even Kazakh bank employees are joining investors in a flight to quality away from the sector. BTA Bank and Kazkommertzbank are overwhelmed by foreign debt too eagerly lent out at home and only Halyk is in good shape. Although there are still a few potential foreign buyers nosing around Kazakh financial assets, Raiffeisen for one has decided that its ambitions in the country will be best fulfilled through a greenfield operation. Elliot Wilson reports.


ONCE THE ENVY not just of central Asia but the whole former Soviet bloc, Kazakhstan’s banking system has fallen on troubled times. The leading lenders, notably BTA Bank and Kazkommertsbank, once acted as de facto financial imprimaturs of the country’s financial rise: the latter, listed in London, was a favourite of investors; both borrowed billions of dollars of capital from foreign investors with ease.

Those days are over. The sector is slowing rapidly, if not actually contracting, and both BTA and Kazkommertsbank are saddled with huge foreign debt obligations, and struggle to raise capital to fulfil basic growth expectations. BTA is attempting to sell off a prized asset – the smaller lender Temirbank – but is finding takers put off by excessive valuations. "Nominally speaking [the banking sector] is growing but in reality it is shrinking as a sector," says Michael Carter, chief executive of Almaty-based investment bank Visor Capital.

It is not just foreign investors that are being put off by the country’s financial woes. Potential banking employees have started to look beyond an industry once able to attract the country’s best and brightest graduates and executives.

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