Translation of Adam’s post

The President has met with the top management of Halyk Bank and Kazkommertsbank, the two (out of four) major banks in Kazakhstan, which have managed to avoid default. He said that the talks about weak banking system in Kazakhstan are idle, and promised that the government would support local banks.

Nazarbayev has also given to the citizens a “recommendation” to keep money in the banks, where the state has its stake, rather than in the banks where the government “cannot exert its influence”. This is not the first time when the president “willy-nilly” advertises certain firms (the most known and funniest case took place during one of his live TV appearences, when he said that his mobile number starts with “8-300″, thus indicating the prefix of one of the competing cellular operators), but, perhaps, this case is the most obvious one, which can seriously influence expectations of the market and consumers of the bank services.

Moreover, such a “good advice” points to the fact that the state considers its own participation in a bank’s capital as a guarantee of the bank’s stability. Is it the sign of the governmental plans to mop-up the banking sector, leaving only those banks that are unconditionally loyal to the government and those, where the government has the share, thus, having the rest of tycoons dispossessed? The current National Bank’s Chairman has repeatedly expressed his opinion that there are “too many banks in the country”. It’s unlikely that this scenario can be applied to all participants of the banking sector, but the trend is set: from this momemnt, lack of the state participation in a bank’s capital will be considered as a potential risk.

Additionally, another promise was made: “The talks that our banks will turn bankrupt, that some foreign bank would come into the country and all of the assets would be transferred there are absolutely inappropriate. I utterly declare that we will not allow any foreign bank to control the banking sector of Kazakhstan”. It should be noted that so far no major foreign bank has had any plans on entry to the Kazakh market (moreover, some of them even preferred to quit). The only bank to which this hint may be addressed is Sberbank of Russia, which is currently considering the buy-out of BTA Bank’s controlling stake, while Samruk-Kazyna Sovereign Wealth Fund has voiced its readiness to sell BTA entirely to Sberbank.