On Wednesday, 3 June, President Nikos Christodoulides of Cyprus arrived in Kazakhstan at the invitation of President Kassym-Jomart Tokayev, accompanied by a delegation of government officials and representatives of the national business community. The two heads of state held bilateral talks, followed by expanded discussions with their delegations. A bilateral business forum was also held on the same day.
The president of Cyprus’s visit was marked by a series of events aimed at strengthening bilateral relations. Although diplomatic relations between the two countries were established 34 years ago, the Embassy of Cyprus in Astana was officially opened only this week. The countries are now connected by direct flights from Astana and Almaty to Larnaca, a development expected to enhance tourism cooperation.
For Kazakhstanis, however, Cyprus has traditionally been viewed less as a tourist destination and more as an investment hub. Even so, its role in this regard has not been particularly prominent: as of the beginning of this year, approximately 1% of the international liabilities held by Kazakhstani residents — equivalent to $3.9 billion — were concentrated in Cyprus.
On the sidelines, participants at the business forum acknowledged that Kazakhstan and Cyprus share a mutual interest, particularly in Kazakhstan’s experience in public-sector digitalization (eGov) and the closely linked financial sector.
Evgenii Tiapkin, executive director of the European division of Freedom Holding Corp. (FRHC) and a participant in the bilateral forum, explained what else Kazakhstan might offer Cyprus and how this European country could become a gateway to the EU.
Freedom bridge
– Evgenii, you’re in charge of Freedom’s entire European business. What does it look like today?
– We launched our European business in Cyprus just over 10 years ago, when we obtained a license from the Cyprus Securities and Exchange Commission and began developing our brokerage service. We also have developers working in Cyprus. We have our own investment platform, Freedom24. It is quite popular among European retail clients, to whom we provide direct trading access to all the world’s exchanges. We now have around 600,000 clients. The company has become one of the largest regulated by the Cyprus Securities and Exchange Commission, with a significant presence across the entire European Union – in fact, we are represented in all 27 EU countries. But we also have physical offices in 10 countries – including Greece, Poland, Germany and Spain, with one soon to open in Portugal. These offices are designed to support our clients from these countries in their local language.
– The inclusion of a bank within the company’s structure, operating within the European regulatory framework, would help to scale the business. What progress has been made in this regard?
– We are considering the possibility of obtaining a banking license in Europe. It is not just about scaling up the brokerage business. We want to offer European clients all the services we currently have in the Freedom SuperApp: banking, lifestyle, insurance products and so on. In this configuration, a bank is the lifeline that enables us to offer the full range of products within the holding company.
– And, as is customary, are you planning to offer this first to your clients and partners in Cyprus? Did you come to the Kazakhstan-Cyprus Business Forum with this proposal?
– Freedom is Kazakhstan’s largest brokerage firm and a major retail bank with a super app.
At the same time, we are one of the largest taxpayers in Cyprus. For us, this forum is an opportunity to present our success in Kazakhstan to the government delegation and business representatives from both countries and to convince them that we can replicate it within the EU.
European regulation is a very familiar area for us. The public nature of our holding company imposes strict requirements on our qualifications. We are very different from any other European brokers and financial ecosystems. We are capable of handling any task related to licensing and regulatory compliance.
– To what extent are Cypriots, and the EU as a whole, interested in Kazakhstan’s experience of digitalization?
– They’re very interested. I think this is becoming a central theme in general. And whichever European regulators we speak to, everyone is interested in, firstly, increasing the level of digitalization within the state and, secondly, increasing it in the services sector.
We want to apply the knowledge and experience we have in Kazakhstan regarding digital lending and roll it out across the European Union. We have accumulated a vast amount of experience. So, naturally, we want to bring all this together under a European banking license.
Our big dream is to replicate all the services we currently offer in Kazakhstan within the Freedom SuperApp. As we work towards this goal, we will prioritize our efforts. But I think projects involving telecom operators in Europe – perhaps initially as a virtual operator – are also generally feasible.
Brokerage plus
– What are the forecasts for business growth in Europe in terms of the number of accounts in the near future?
– Once we have obtained a banking license within the EU and completed the technical preparation of our platform, we will be able to attract millions of customers. Looking at today’s neobanks, with which we will effectively be competing, we expect to gain market share through products they do not offer.
However, most importantly, market capitalization will grow partly on the back of expectations of future growth. We believe this will significantly increase the holding company’s overall market capitalization. Currently, our competitors are valued at around €100 billion with 70 million customers. If we capture even 10% of this market, it will multiply the holding company’s market capitalization.
– What gives you the confidence that securing this, say, 10% in the EU is realistic?
– We see clear competitive advantages for Freedom. Firstly, there are virtually no digital banks in Europe; there are neobanks. Secondly, what sets the Freedom ecosystem apart is the presence of its own industry-leading companies. All these investments have come together to form one large ecosystem where you don’t need to leave the platform at all to buy car tires, insurance, or stocks, or to pay for school. There is, in fact, nothing quite like this in Europe.
– Will this ecosystem offering launch in a single national market – say, Cyprus or France – or will it be rolled out across the EU from the start?
– A European banking license allows a bank to passport its services and offer them across the entire EU. Therefore, the service within the app will automatically be available to all customers who use that bank’s services. The bank could be French, Cypriot, or any other. You could be in Spain and still easily open an account and access all the products available on this super-app.
– How do you assess European interest in the Kazakhstani stock market? Yields in tenge are higher than in euros.
– We currently have several projects to issue Eurobonds on behalf of Kazakhstani companies. But first, we plan to issue our own bonds, obtain a prospectus for them and secure passporting. We are also running parallel projects on dual listings and the prospectus registration of financial instruments already in circulation in Kazakhstan. As soon as these regulatory issues are resolved, I am confident that they will be in demand: high yields, clear risks relating to the counterparty, the country and the issuer.
