Russian banks aren’t going to leave Kazakhstan

However, they struggle to fit the situation

In official responses to the request from the Kursiv edition, Sberbank Kazakhstan and Alfa Bank said that they do not plan to leave Kazakhstan’s market while VTB said that only the headquarters in Moscow can decide whether its subsidiary should leave the country or stay. 

While responding to a question of whether Alfa-Bank is going to leave Kazakhstan, the bank said that its business on the local market doesn’t depend on Russia and the bank won’t sell its business here.

The bank noted that last year its ROE was 29% and capital adequacy was 16.6% which is much higher than the minimum threshold required by the regulator. In 2021, the bank reported net revenue of $63.46 million which is 30% more than a year earlier and 1.5-fold more is compared to 2019. The bank’s share of liquid assets is about 40%, quite a high rate.

“Bank liquidity depends on the local market funding; no Russian money was used,” the entity said.

Sberbank Kazakhstan said that it is working as usual and does not plan to leave Kazakhstan. VTB said that the decision to leave the market is a prerogative of the headquarters. “They do support us. It shows how our subsidiary bank is important for the entire VTB Group,” the bank said.

On March 4, VTB Group said that it is going to support its subsidiary in Kazakhstan and provide it with additional funds. So far, Bank VTB Kazakhstan is going to continue servicing its liabilities to clients and partners and providing the population with financial services.

Alfa-Bank Kazakhstan has admitted that the volume of loan facilities has been shrinking. Geopolitics affects almost everything inside the country, including the risk appetites of banks. As a result, commercial banks change their approaches to risks. The value of borrowed funds is growing and it narrows the ability to get a loan.

“On February 24, 2022, the monetary policy committee of the National Bank approved the base rate increase. As a result, commercial banks have also raised their interest rates or even stopped issuing loans. In light of this we continue to work with our current clients but do not seek to issue new loans,” said the bank in an official response.

Sberbank and VTB haven’t responded about loan issuing dynamics.

On March 9, Fitch Ratings downgraded Sberbank Kazakhstan, Alfa-Bank and Home Credit long-term issuer default ratings to B+. The move followed lower ratings of their parenting companies in Russia.

According to Kazakhstan banks, their local clients won’t be able to use their banking cards in Russia. At the same time, Russian citizens can’t use their cards in Kazakhstan. Even clients of Sberbank Kazakhstan and Alfa-Bank will be able to use their cards in Kazakhstan or any other country except Russia. Right after the Russian invasion of Ukraine, the U.S. Department of the Treasury imposed sanctions on several Russian banks. Clients of these entities are denied from using their cards anywhere outside Russia. This country has already been cut from SWIFT. International payment systems such as Visa and Mastercard have also supported international sanctions against Russia. Another prominent financial company Western Union is going to stop its activity in Russian starting from March 24. Moreover, Russian citizens can’t use mobile services such as Apple Pay and Google Pay.

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