A high-level forum exploring the investment potential of Almaty as the newly redefined financial hub of Central Asia titled Financing Growth in Kazakhstan was held at the Ritz Carlton hotel in Almaty on Nov. 7.
The event, which waspresented by the Financial Times’ “The Banker” publication in partnership with the Kazakh-British Chamber of Commerce and with support from the National Bank of Kazakhstan, included discussions on banking news, the conditions needed for optimal performance in a changing global economy, key trends and various opportunities for the development of the financial sector.
Speaking to forum participants via a video link, Prime Minister Karim Massimov stated that Kazakhstan’s financial reserves have exceeded $100 billion, accounting for 40 percent the country’s GDP. He called the further economic plans of the government responsibly ambitious and said that the Kazakhstan 2050 Strategy should be completed successfully on time. Almaty and its potential as a regional financial hub are set to play a large role in that effort.
“The financial services industry will remain the engine of growth. We have achieved significant progress in this field,” stated the prime minister. “Since 2006, the government has been working intensely to develop a regional financial centre here, has been engaged in building infrastructure, developing human capital and improving the regulatory environment.”
Massimov noted that recently, Almaty climbed 15 places on the global index of regional financial centres and has reached 43rd place, passing cities like Brussels, Milan, Moscow, Prague and Rome.
The editor of one of the world’s largest business information resources, The Banker, Brian Caplen noted: “[In Kazakhstan,] We see an increase of about 5 percent; based on the ratio of external debt to GDP, a small budget deficit. These are figures of which the EU only dreamsabout.”
Chairman of the National Bank of Kazakhstan Kairat Kelimbetov discussed the major issues of the times in the banking industry and their solutions.
Kelimbetov stressed that the main challenges for Kazakhstan today are ongoing problems pertaining to bad loans. “Much has been said about this subject and a lot is being done over multiple stages. There are the unprecedented tax incentives that the government will provide in the near future to allow most banks to write off nonperforming loans in a painless manner,” Kelimbetov said in reference to government plans to aid the banking sector.
“There is also a problem that arose in the banks that have passed through the crucible of restructuring. Since independence, none of the top 10 banks have declared bankruptcy. This shows that the state stands behind the banks – both through guaranteeing deposits and through the work that was done during the crisis,” continued Kelimbetov.
According to him, another important issue is the involvement of the population in banking and financial services.“To address these questions, we need to keep up with the times. The financial world is constantly undergoing technological revolution. This means we should not just follow trends, but also to try to get ahead of them,” added Kelimbetov.
Speaking of the latest trends in Kazakhstan’s banking sector, Magzhan Auezov, the managing director of Kazkommertsbank, reminded the delegates that while Kazakh banks are conducting mergers, foreign banks are not keen on developing their networks in Kazakhstan, which creates the opportunity to increase the volume of domestic banks and introduce new products at home.
“This year, we introduced a line of credit that allows commercial banks to adjust currency positions through funding secured in Kazakhstan tenges. The programme will help remove many historically acute problems for managing foreign exchange position. Thus, the result was a significant stabilization of domestic funding and the ability of banks to increase tenge loan portfolios. It is important to note the timeliness of decision-making. The third quarter of 2014 will be a turning point in our sector in terms of the volume of mergers and acquisitions in the market. Combining Kazkom and BTA, Alliance, Temirbank and Forte, and the acquisition of HSBC’ssubsidiary bank in Kazakhstan by Halyk Bank will lead to substantial reformatting of the sector in the near future,” said Auezov.
“An important metric that is seeing a continuing decline is the share of foreign banks in Kazakhstan. Today, we see that almost all the major banks, in the implementation of their programmes to overcome non-core markets, have left Kazakhstan. Uni Credit bank this year sold its subsidiary bank; HSBC also significantly reduced its operations in RBS’s Kazakhstan operations. They had one objective – to provide the best possible funding to the best borrowers. Banks have played an important role in actively promoting a wide and high quality product line. For us, filling the vacuum that has formed is important,” concluded Auezov.