STREAMLINING OF KAZAKHSTAN’S BANKING SECTOR CONTINUES.

To celebrate Independence Day on December 16, Kazakhstan’s National Bank will print two commemorative bank notes each to the value of 20 tenge. (Delovaya nedelya, December 12) The National Bank’s more pressing agenda, however, was outlined in a press statement on December 11. (Panorama, December 12) In its second move of this kind, the Bank has withdrawn licenses from six regional banks, whose assets, consisting almost exclusively of non-returnable credit, were deemed as "negative for Kazakhstan’s economy". Simultaneously, the National Bank named the eight banks that it regards as solid in terms both of size of private capital (over 1 billion tenge) and of assets. They are Kazkommertsbank, Narodny bank (Savings Bank), TuranAlemBank, ABN AMRO Bank, Temirbank, Evraziisky Bank, Eksimbank, and Kazagroprombank. (Delovaya nedelya, December 12) With the establishment of a bank branch in the Republic’s new capital costing as much as 300 million tenge, the move to Akmola is likely to cause a further reduction in banking operations. Currently, only four medium-sized banks operate in Akmola.(Delovaya nedelya, December 12)

The banking sector today differs markedly from the early days of independence, when, prior to the tenge’s introduction in November 1993, the National Bank was a prisoner to Moscow’s ruble emissions. By 1995, Uraz Dzhandosov and his then aide, Grigory Marchenko, both appointed by former prime minister Akezhan Kazhegeldyn as, respectively, Head and Deputy Head of the National Bank, had introduced several reforms. Learning from the success of ABN-AMRO, the authorities placed a 25 percent ceiling on foreign participation. Moreover, with the goal of attracting equity and debt financing, the government set up state banks involved in investment, such as the state Export-Import Bank, the Rehabilitation Bank, and the Bank for Housing Construction. The leading commercial bank since 1996 has been Kazkommertsbank. Its close links with Kazhegeldyn were no secret.

The government has given Kazkommertsbank the task, over the next few months, of acting as financial manager to several of the country’s strategic industries which are on the verge of bankruptcy, such as the state air company, Kazakhstan Aue Zholy, and various uranium enterprises. Meanwhile, the government, along with the National Bank, will set about privatizing the Savings Bank. A portion of the Bank’s shares will be sold on the stock exchange, and a portion will become state security deposits. Ultimately, however, Kazakhstan seems destined to be plagued by a dearth of capital, hindering many of the more attractive investments which continue to be in the capital intensive areas of the extractive and processing industries.

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