Regulator changes rules for admitting foreign executives in Kazakhstani banks
The Agency for Regulation and Development of the Financial Market (ARDFM) has changed the rules related to the appointment of executive managers in banks, banking holdings and branch offices with foreign capital. The document has also made it easier for foreigners to acquire Kazakhstani banks. The regulation has already been adopted and will enter into force soon, the regulator said on its official website.
On the other hand, any company with foreign executives on its board is now obliged to reveal data on those executives to prove their flawless reputation. This is a new requirement in the country’s legislation.
The document has also ruled that candidates who previously worked as «public servants responsible for state policy in the sphere of economy, finance and state audit and financial control» do not need to pass any tests designed to assess their skills. Now, a special commission will decide on this. The testing is no longer mandatory for executive workers in the Baiterek holding and its subsidiaries, the Development Bank of Kazakhstan and the entrepreneurship development fund.
Moreover, a foreign financial organization may become a bank or a banking holding without any special arrangements between the ARDFM and a regulator from another country if it purchases 100% of a bank’s shares from the national managing holding. This regulation was designed to facilitate the sale of Bereke Bank from Baiterek to Lesha Bank.
The new regulation is expected to enter into force soon. The full version of the document will be available on the ARDFM’s website and in the Adilet legal information system once it is registered with the Ministry of Justice.
In late May, Lesha Bank, an investment bank from Qatar, announced the purchase of Bereke Bank for $137 million or simply 39.8% of its capital ($343.8 million as of April 1).
The first media reports about the sale of Bereke Bank arose in mid-February. At the time, the media said that Lesha Bank was negotiating with Baiterek, which also controlled Otbasy Bank and the Development Bank of Kazakhstan, about acquiring the bank.
Before the fall of 2022, Bereke Bank was part of Russian Sberbank and operated under the same brand. Baiterek acquired the bank after the U.S. imposed sanctions against Sberbank and its subsidiaries. However, Baiterek made it clear that it intended to find a new owner for the bank. In March 2023, the U.S. Department of the Treasury lifted all its sanctions on Bereke Bank, allowing the bank to restore its correspondent accounts and banking transactions.
In September 2023, President Kassym-Jomart Tokayev said in his address to the nation that the country needs to attract at least three reliable foreign banks to boost the sector’s development. According to the Chair of the ARDFM, Madina Abylkassymova, there were some foreign investors interested in purchasing another Kazakhstani bank. Therefore, a new deal may happen by the end of the year.
Furthermore, three microfinance organizations in Kazakhstan – Solva, KMF and BNK Finance – are going through the transformation into banks. KMF is expected to become a bank this year. Solva is also on its way to becoming a bank by the end of the year, although the regulator rejected the company’s documents several times, claiming that they hadn’t met legal requirements, according to Abylkassymova. BNK Finance hasn’t revealed any timeline for the move, although President Tokayev has publicly supported its decision to become a bank.
