The Development Bank of Kazakhstan (DBK) is going to reveal any information about its potential counterparts. When a company approaches the bank to get a loan, DBK must make a company’s records public, including its final beneficiaries. The new rule has been approved by the bank’s only shareholder holding Baiterek.
According to the bank’s press service, previously the DBK was obliged to disclose just a general overview of projects it decided to financially support. Ruslan Iskakov, head of the bank says that the bank used to follow the law on bank secrecy. That’s why it was reluctant to disclose information about its current and potential customers.
“The new rule will allow us to stay transparent at any stage of interaction with a customer, from the very first moment of filing of an application for financial support to the stage of its approval or rejection,” he said.
In addition, under the new rule, the DBK will not be able to provide financial resources for public-private partnership projects as well as to companies where 50% or more stocks belong to the government of Kazakhstan. The point is a dispersion of resources because all those quasi-state companies can get financial support directly from the government. However, if there are other loan issuers or that project is co-financed by an international financial institution, this rule might be abandoned. Moreover, all those projects must meet environmental, social and corporate governance (ESG) principles.
“The DBK is going to focus on the development of the private sector. We intentionally restrict our capabilities to cooperate with state companies because they can attract financial resources directly with no mediators,” Iskakov said.
Under the new requirements, private companies won’t be able to secure their loans with state property. Also, they should be ready to show a detailed plan of how they are going to increase the level of transparency for procurement procedures within their projects.
Another financial entity, the Industrial Development Fund, a subsidiary of the DBK that used to be involved in leasing operations, now is going to issue direct loans for the processing industry in Kazakhstan and to attract foreign and domestic investments into the national economy. The sole stakeholder of the fund has approved respective changes to the fund’s standing orders.
In May, the DBK said that it won’t issue loans to domestic moguls or members of Nazarbayev’s family, the former president of the country. For example, the bank removed from the list of projects to be financed by the entity two companies affiliated with Timur Kulibayev, a billionaire and son-in-law of the former president. His company Almex Petrochemical was going to produce terephthalic acid and polyethylene terephthalate while his company QAZSUGAR Co. planned to build a sugar beet processing plant in the Zhambyl region.
In January 2022, President Kassym-Jomart Tokayev fired a salvo at the Development Bank of Kazakhstan during his speech to the parliament. The president said that the DBK turned into a private bank for a narrow circle of people representing financial-industrial and construction groups. “They took advantage of free access to corridors of power to make their projects come true. We know all of them by name,” stated Tokayev. After this criticism, he ordered the government to improve the way the entity operates.