Kazakhstan to halve its banks in 5 years: opinions29 april 2014, 00:45
Only core banks will be left in Kazakhstan in five years, a financial analyst from Alpari firm Anna Kokoreva told Tengrinews. She forecasts that these banks will include Kazkommertsbank, Halyk Bank and Eurasian Bank.
She made this statement commenting on the plans announced by the head of the National Bank of Kazakhstan Kairat Kelimbetov on April 17. He said that the number of banks will be halved by 2020 and only 15-20 banks will remain in Kazakhstan in 5 years, compared to the current 38. The National Bank plans to raise the required minimum equity capital tenfold to 100 billion tenge ($548 million) by 2019 and demand that all the banks bring the share of bad loans in their portfolios down to 15 percent before the end of this year and down to 10 percent before 2016.
According Kokoreva, the prospect of reducing the number of banks in Kazakhstan by half in five years is a quite realistic one, since there is an already relatively small number of the financial institutions in Kazakhstan. She referred to Russia for comparison: the Russian central bank plans to cut the number of banks threefold during the same period. And there are now about one thousand banks in Russia.
"These measures are called to make the Kazakhstani banking system more stable," she said referring to the forthcoming toughening of the capital adequacy requirement. "Fewer banks mean easier management and monitoring of their activities. Besides, reduction of the number of banks automatically leads to their enlargement. Smaller banks understand that they cannot survive on their own and are unlikely to meet the new requirements, so they merge," Kororeva said.
A financial analyst from MFX Broker firm Sergei Nekrasov believes Kazakhstan banks have more than enough time to increase their equities to the required 100 billion tenge until 2019. "Some banks will merge into larger ones that will meet the National Bank requirements. Raising the minimum equity requirements is a way to increase the size of the financial institutions and reduce their number," he agreed.
He believes that small banks like Taib Kazakh Bank (renamed to Capital Bank Kazakhstan), Qazaq Banki and Shinhan Bank Kazakhstan are going to be first to disapear from the market.
Nevertheless, there are those who are skeptical about the central bank's plans. Anton Soroko, an analyst at Finam investment company, believes that reducing the number of banks twofold in five year is way too fast, although achievable. He believes that in practice the transformations are going to be more gradual.
"Proposals to sharply rise the equity capital requirements were made before. Recently it was offered to set the minimum to around 90 billion tenge ($494 million),” he recalled.
"Right now only five banks have the capital exceeding this threshold and five other banks are near enough to be able to find the needed reserves. All the rest – that hold 20 percent of the asset market – are unlikely to meet the new requirement unless their shareholders will come up with additional investments," he said.
Reporting by Azhar Ashirova, writing by Dinara Urazova, editing by Tatyana Kuzmina