TBY talks to the chairpersons of two top local banks on the financial sector, the government’s response to the global crisis, and their expectations for economic performance.
What is your assessment of the Kazakhstani banking sector?
ANVAR G. SAIDANOV I think the financial sector came through the crisis successfully, mostly due to the support of the government. This was not just through capital injections to the major banks, but also through government programs to support SMEs, the real estate sector, and agriculture. However, there is still a lot to be done. One of the major challenges for 2011 is the quality of the loan portfolio. To clean loan portfolios is crucial, and not so easy, because many clients and borrowers are still in a difficult situation. The restructuring of loans to these clients will be the major policy of a number of the big banks. On the other hand, in terms of liquidity, our banking sector is in a pretty comfortable position, even though it’s mostly short-term liquidity.
NINA A. ZHUSSUPOVA The bank’s growth reflects Kazakhstan’s evolution because the two have been implicitly intertwined. Kazakhstan declared its independence shortly after the bank’s inception and we supported the government in effecting the transition from a central command economy to a more diversified market system. For example, we acted as consultants on the privatization of the oil and gas, processing, telecoms, transport, and energy sectors between 1996 and 1997. We have consistently promoted the economy’s growth over the years through lending to businesses of various sizes and in numerous sectors, which has in turn supported our own development.
What is your assessment of the government’s response to the global financial crisis?
AS By 2010, the external debt of three main banks was restructured, namely that of BTA, Alliance, and Temir Bank. After this restructuring process the whole banking sector felt a sense of relief. BTA is one of the three or four biggest banks in Kazakhstan, and all eyes were on the debt restructuring process, from the government, to the market, to creditors, international investors, everyone.
The approach chosen by the government and Samruk-Kazyna proved to be right. After the restructuring process, which was in accordance with international standards, BTA has emerged as a bank compliant with financial regulations and has maintained its client base.
NZ The crisis had global implications. In Kazakhstan, given that we do not have developed capital markets, the government’s actions were focused on the banking sector because it is the key to the financial system. If you look at the funding of Kazakhstani banks in general, it is based on short-term domestic funds and long-term wholesale international banking.
When Kazakhstani banks faced difficulties, first in getting new finance internationally, the role of the provider of long-term funding was taken over by the government. This long-term funding came from the government, and in general we can divide this funding into two parts: firstly, deposits coming from state-owned companies, and secondly, funding coming from the government’s stabilization programs. I don’t think it is correct to say that the government supported the banking sector. The banks in this situation played an intermediary role, and the government’s support was transferred to the non-oil and gas sectors of the economy.
What’s your outlook for economic development in 2011?
AS I think the general macroeconomic situation is more or less favorable, and when we look at commodity price trends—be it metal prices or oil prices—it all looks good for Kazakhstan. GDP will experience growth, maybe less than in 2010, but it is still expected to be around 4-5%, as estimated by the National Bank. Because of the global oil price, the tenge will strengthen against the dollar. Road Map 2020 will continue to support SMEs, especially manufacturing and export-oriented businesses. The government will focus a lot on infrastructure in the coming years, since Kazakhstan is at the crossroads of trade routes and major economic powers, between Europe, Russia, and China. Our Customs Union with Belarus and Russia will very much influence how our local production will develop in the coming years, as will the continued growth and involvement of China.
Are you expecting to see consolidation in the country’s banking sector?
NZ Currently, the big banks command the lion’s share of the sector. There are certain positives to be gained from absorption and association, and competitive advantages can be earned. I can say, however, that I don’t see any particular movement in the sector toward significant consolidation at this time. I believe natural driving factors will reveal themselves over time.
© The Business Year