Bekzhan Pirmatov, CEO of Forte Bank, and Umut Shayakhmetova, CEO of Halyk Bank, do not think that the arrival of foreign banks is a magic pill for Kazakhstan’s banking sector. Newcomers are probably bound to lend money to businesses and consumers at higher rates than their local competitors. Here are some quotations from the executives’ speeches at the conference «Financial Sector of Kazakhstan: 25 Years of Strategic Challenges.»
The issue was discussed against the backdrop of reports about the acquisition of Bereke Bank by Lesha Bank from Qatar. Even though the deal was closed on March 31, the Qatar Stock Exchange revealed the news only now. The buyer paid the state-owned Baiterek holding $147.2 million, which is just 39.8% of Bereke Bank’s capital.
Bereke Bank was sold seven months after President Kassym-Jomart Tokayev came up with the idea of attracting three new, reliable foreign banks to Kazakhstan.
«A stable regulatory environment is the most important criterion for international banks. I know we have been discussing this a lot but this is important. Of course, the economic volume, the level of consumption and the size of the population also play a big role,» Pirmatov said.
As the banker noted, international banks decide whether they go to one country or another only after rigorous analyses of these criteria. He also doubted the inflow of foreign banks to Kazakhstan anytime soon.
«International banks aren’t a magic pill. They already worked here. I did work at such banks myself. But this doesn’t mean their loans would be cheaper than loans from Kazakhstani banks. Their requirements for borrowers might be even harder than at local banks. Why do you think they would immediately deploy mass lending after their arrival?» the head of ForteBank highlighted.
However, Pirmatov admitted that foreign banks would promote competition in the country’s banking sector. This would improve Kazakhstan’s international image and somewhat contribute to its economic growth.
In turn, CEO of Halyk Bank Umut Shayakhmetova pointed out that foreign banks have already been operating in the local market. She agreed with Pirmatov, noting that it would be naïve to believe that foreign banks would solve historical problems in the sector and expand lending to businesses.
«As of today, 12 banks in Kazakhstan out of 21 have foreign shareholders. This is more than 50%. However, nine Kazakhstani banks account for 90% of all assets in the sector, lending facilities and deposits. I mean, even though half of our banks are foreign banks, they account for only 10% of assets. I simply cannot comprehend why everybody believes that foreign banks would solve our problems for us,» Shayakhmetova said.
Commenting on the deal with the investor from Qatar, who acquired Kazakhstani Bereke Bank, Shayakhmetova described it as non-marketable:
«The deal we came to learn yesterday was another example. The government has sold Bereke Bank at a significant discount. We don’t know whether the evaluation was marketable or not. It’s just 40% of its book value. The price they set for the bank was too low,» she said.
In late March, Deputy Head of the ARDFM Nurlan Abdrakhmanov revealed that the regulator was negotiating with Chinese, Korean and Turkish banks on opening their subsidiaries in Kazakhstan. Madina Abylkassova, the head of the agency, has also said that at least one foreign investor is interested in purchasing a bank in Kazakhstan. She noted that the deal might happen by the end of this year.
