Kazakh banks rose from the ashes

Last week it became known that the holding group "Almex" - the main shareholder of Halyk Bank of Kazakhstan - the state is going to buy a stake in the bank. Following the transaction, the state's share will decline from 27 to 13%. But far more important that the deal would be a sign of re-privatization of the banking sector, partly under the control of the government passed the crisis. The most progressive. Economy of the Republic of Kazakhstan (RK) is a lot like Russia. It develops primarily due to the export of raw materials - oil, gas, metals and grains. But as the market of the republic were far fewer major complications arise with diversification. And then say, in terms of oil reserves per capita Kazakhstan than Russia more than 5 times. Proved oil reserves in the comparable (43 billion barrels - in Kazakhstan, 73 billion - in Russia) and Kazakhstan's population is about 9 times smaller. But as oil prices in the last 10 years everything was in order, it has provided to our neighbor rapid development theme. In the period from 2000 to 2006, GDP grew at an average of Kazakhstan at 10% per year, while the average for the CIS, this figure was only 7.3%. Along with rapid economic growth of the financial sector contributed to the country and "luck" with the progressive state bureaucrats. Widely respected in the CIS uses Grigory Marchenko, head of the National Bank of Kazakhstan and now his head from 1999 to 2004. Thanks largely to the past when it reforms in 2001, Euromoney magazine has announced the country's banking system the most advanced in the CIS. All the major innovations in Kazakhstan are taking before in Russia. Thus, the deposit insurance system introduced there in the last century, and IFRS Kazakhstani banks pass a mandatory 10 years. "The banking law has moved beyond all of Kazakhstan. They have a lot you can learn from "- the president of the ARB" Russia ", State Duma deputy Anatoly Aksakov. Even now, after the crisis, when the balance of Kazakh banks showed a huge amount of toxic assets, it may be a matter of pride. As stated by Catherine Mills, director of financial institutions ratings of international rating agency Standard & Poor's, «on NPLs level of transparency in the ROK is one of the highest in the world." Of course, in their aggregate might Kazakh banks can not compete with the Russians. But its quality indicators Kazakh system is more developed. On the eve of the crisis were total assets of banks in Kazakhstan, 92% of GDP, while in Russia - 53%. The volume of mortgage loans by the year 2008 in the country has exceeded 5% of GDP, while in Russia and did not reach 2%. The same goes for consumer credit: Kazakhstan - 12% of GDP, in Russia - 9% of GDP. In this case, unlike in Russia, in Kazakhstan before the crisis was dominated not by government and private banks. Approximately 60% of the market (and have) to the "big three" - Kazkommertsbank, BTA and Halyk Bank of Kazakhstan. Planted a bomb. But the rapid development of the banking sector always have higher risks. Because of the disparities in the growth of the financial system and industry Kazakh banks were unable to find within their own country has enough resources for development and were forced to more actively than the Russian, borrow abroad. Gross foreign debt of banks rose from 6% of GDP in 2002 to 45% of GDP by the end of 2007, representing about half of the total external debt of Kazakhstan. In Russia, at the peak of the boom in the third quarter of 2008 this figure was only 11.2% of GDP. Before the crisis alone eurobonds placed Kazakh banks accounted for 20% of the total liabilities of the system. Simultaneously, Kazakh banks have been hard to find good borrowers in Kazakhstan, which had three important consequences. First, it began issuing not very high-quality loans. Secondly, the Kazakh banks began expanding outside the country. Third, they are even stronger than the Russian, were tied to real estate projects. The combination of dependence on foreign bank loans, super-fast credit expansion, and tight binding to the construction sector was a "bomb", which "exploded" during the crisis. "Access to affordable bank credit in international capital markets led to an increase lending to the economy from 1 October 1999 to January 1, 2009, more than 50 times, which is clearly overheated economy - the director of Public Policy Research Centre (PPRC) Makhmutova. - Poor risk assessment, and inadequate evaluation of the quality of loan portfolio led to an increase of bank loans in real estate and services sector, contributing to systemic imbalances in the economy. All of these processes did Kazakhstan's economy vulnerable to the effects of the global crisis. " Back in 2007 - a year earlier than in Russia - Kazakh banks have experienced shortage of international funding. Several banks - BTA Bank, Alliance Bank, "Astana-Finance" - defaulted on its obligations. Banking assets of banks decreased from 92% of GDP at end-2007 to 64% of GDP at the end of November 2010. Today the agency S & P defines a troubled debt of Kazakh banks in 40% of the portfolio (along with restructured loans - more than 50%). Net write-offs in the Kazakh banking system accounted for 14% of total loans in 2010 and 4% of total loans in 2009. In total, during the time elapsed since the second half of 2007, when the crisis began, the total amount of write-downs reached about 8.6% of GDP. The collapse of the banking system of Kazakhstan was accompanied by a number of international scandals. Ran away from criminal prosecution in the UK, former owner of BTA Bank, Mukhtar Ablyazov, with the main foreign assets of the banking system, Russia's BTA Bank, was lost to the parent bank and renamed AMT Bank. South Korean bank Kookmin head was even sacked the national financial regulator for a number of losing trades, among them - buy Kazakh bank CenterCredit, hiding under a deal the size of external debt and the real quality of its loan portfolio. High Court in London ordered the freezing of assets of the family Assaubayev around the world, including Kazakhstan, where there is Assaubayev Altyn Credit Bank. They sent the cavalry. In 2009, President Nursultan Nazarbayev said that "the banking sector has not been tested free market, becoming the conductor of the external shocks that caused a chain reaction of contagion pulse on the real economy of the republic." But this does not become a farewell to "the most advanced banking system," the former Soviet Union. As noted in the review of the Center for Macroeconomic Research, Sberbank of Russia, Kazakhstan was one of few CIS countries emerging from crisis without falling GDP. Its growth has slowed down only to 3.3% in 2008 and to 1.2% in 2009. While the largest banks in Kazakhstan have been during the crisis on the verge of bankruptcy, no credit institution of the republic is not ruined. The Government of Kazakhstan, thanks to petrodollars have sufficient financial resources, it is to help banks and held their partial nationalization. To stabilize the financial sector has been allocated $ 4 billion of this amount went to provide assistance to banks, and some - to redeem their shares: 100% of Alliance Bank, 75.1% of common shares of BTA Bank, 20.9% of common shares of Halyk Bank of Kazakhstan , 21.2% of common shares of Kazkommertsbank. Owner on behalf of the state became sovereign wealth fund, "SK". The state is effectively negotiated with foreign creditors of the nationalized banks (Euromoney magazine even recognized BTA debt restructuring deal in 2010). As a result of $ 4.5 billion in debt Alliance Bank has written off 3.5 billion debt of BTA Bank has decreased from $ 16.7 billion to $ 4.4 billion, and Temirbank (daughter BTA) - with $ 1.4 billion to $ 700 million The period of repayment of the remaining debts of BTA Bank increased from 3-5 to 8-20 years, and by 2015 will only pay interest and only after - repayment of principal. Alliance Bank also agreed to defer payment of debt and reducing interest rates by 4-5 pp "I believe that banking financial sector in general, the acute phase of the problems that stood in front of him, was - said recently, Prime Minister Karim Masimov. - That is the very banking system returned to its stable state, the liquidity is very good. " Company "Troika Dialog Kazakhstan," predicts that in 2011 Kazakhstan's GDP could grow by 6.5% - according to experts, this prediction is more realistic than the official 5%. Experts expect that in 2011 the growth in private consumption in Kazakhstan will not be below 10%. Rising oil prices have prompted analysts "VTB Capital" to increase the prediction rate of the Kazakhstani tenge against the U.S. dollar at the end of 2011 from 145.5 to 139.0 at the end of 2012 - from 145.0 to 138.0. According to the head of the Association of Financiers of Kazakhstan Serik Akhanov, systemically important banks now offer credit growth forecast in 2011 to 5-10%. Kazakh Phoenix. "Despite the challenges posed by the global financial crisis and the local real estate market, the banking system of Kazakhstan has survived and continues to develop - said" F. "Head of Product Development CC FG BCS Dmitry Kashan. - Right now it is ahead of Russia's system in some areas - such as mortgages. A simple and rapid development contributes to small scale systems - all three dozen banks. It is easy to agree on the rules of the game, which has a positive position with the bank, but not always good with the client's position - little competition. So from the internal point of view a matter of perspective is not necessary - it is positive. " Nationalised banks have sold. "Almex 'principal owner of Halyk Bank of Kazakhstan, the state buys back shares in the bank. BTA Bank interested in Russia's Sberbank, and although the final decision was made, a new round of negotiations with the Fund "Samruk Kazyna" German Gref promised to begin after the bank's audited financial statements for the year 2010. However, some analysts believe that the "condescending" attitude of the Kazakh government to "bad debt" strategically slowing the growth of the Kazakh economy. As stated by Catherine Mills of Standard & Poor's, Kazakhstan is not the active elimination of bad debts, so as not to exacerbate the negative effects of the crisis. Instead, the country was made a conscious political choice in favor of maintaining social stability, which has a "downside." According to Ekaterina Trofimova, "for the excesses of the pre-crisis period, someone has to pay. This board is continued stagnation in the Kazakh banking sector, it is very slow recovery, a large amount of arrears ", - says Mills. However, Russia can only dream about such a "slow recovery". Curiously, if the "Eurasian integration," according to the Government goes to plan, by 2020 there will a single financial space and Eurasian Kazakh banks will have the opportunity to work in Russia through subsidiary banks, but directly. It can be assumed that Russian private banks, already suffering from competition with the domestic state banks and western financial giants, will be another category of very strong competitors.