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Eurasian Business Briefing Kazakhstan

Governor looks to position AIFC as centre for Islamic banking in CIS

AIFC Governor Kairat KelimbetovKazakhstan is planning to promote its new Astana International Financial Centre (AIFC) as a leading regional platform for the spread of Islamic finance and banking across the CIS region, the centre’s governor Kairat Kelimbetov confirmed this week. (more…)

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Nurly Zhol and structural reforms set to boost Kazakh growth to 2.5% – IMF

Nurly ZholA combination of targeted fiscal support, exchange rate adjustment, strengthened domestic liquidity management and structural reforms have helped Kazakhstan counter the effects of lower oil prices and slower growth in Russia, China and Europe, the IMF pronounced this week; and, while GDP growth slowed to 1% in 2016, it is expected to bounce back to 2.5% in the current year.
Significantly, (more…)

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Kazakh banking consolidation continues with Halyk and Qazkom in merger talks

Qazkom BankHalyk Bank logoThe ongoing consolidation of Kazakhstan’s banking sector could be about to undergo a major step change after it emerged that two of the country’s largest financial institutions, Halyk Bank and Qazkon were in merger talks. If successful, the new bank would command 38% of the country’s total bank assets (around $30bn) and have a combined loan base of approximately $20bn.
A rationalisation of the sector has been under way since 2015 when, with almost all of Kazakhstan’s banks still coming to grips with the fallout from the financial crisis of 2008/9 which left them grappling with weak balance sheets and a large number of non-performing loans (NPLs), the sector began coming under added pressure from the slowdown in the Chinese and Russian economies and plunging oil prices. Real GDP growth dropped from 4.3% to 1% and in August 2015 the authorities in Astana decided to float the tenge, causing its value to drop by 30% overnight,.
The devaluation impacted on all the country’s banks with Qazkom’s woes compounded by its acquisition of the nationalised BTA Bank (whose NPL rate stood as high as 89%) earlier in the same year.
Following government intervention, principally through the launch of a $2.8bn fund to help its banks tackle the problem of their ever-present NPLs, the National Bank of Kazakhstan (NBK) last year introduced new rules forcing them to raise their equity-deposit ratio and to increase the maximum permissible tenge deposit rate from 10% to 14%. Having also signed up to the Basel III regulatory framework accord (the global voluntary regulatory framework that calls for participating countries to strengthen their banks’ capital requirements by increasing liquidity and decreasing leverage) it then demanded that they raise their minimum equity levels to $300m – a 1000% increase – by 2021.
With only a handful of banks (including Halyk and Qazkom) currently meeting those requirements, the NBK’s policy was bound to trigger a wave of mergers and acquisitions. In the same year that Kazkommertzbank bought BTA, Forte Bank executed a reverse merger the Alliance and Temir banks, while the Eurasian Bank took over BankPozitiv.
Following news of the possible merger shares in Halyk Bank fell by 11.4% percent and those Qazkom increased by 6%.

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Air Astana, Kazatomprom and KazMunayGaz to kick off Kazakh privatisation programme

airastanaKazakh privatisation programme: A significant proportion of the Kazakh government’s stakes in KazMunayGas, Air Astana and Kazakhtelecom operator are to be sold off over the next 18 months after a government commission gave its approval to plans drawn up last year by the Samruk Kazyna Sovereign Wealth Fund to privatise a total of 153 companies through a series initial public offerings (IPOs), the fund’s CEO Umirzak Shukeyev announced earlier this week. (more…)

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Kazakhstan to increase Silk Road container capacity tenfold by 2020

Minister of Investment and Development Zhenis KassymbekKazakhstan has signed up to increase the volume of container shipments that it processes on the new Silk Road between China and Europe from a current yearly total of 70,000 this year to 800,000 by the end of the decade, (more…)

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Astana to auction 60 Kazakh oilfields

Kazakh Energy Minister Kanat BozymbayevKazakh oilfields: Astana is planning to put more than 60 potential oil and gas fields up for auction next year, Energy Minister Kanat Bozumbayev announced yesterday. The majority of the fields are located in the deep waters of the Caspian Sea where (more…)

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Nazarbayeva moves up succession line as Dad moves to quell rural unrest

Dariga NazarbayevaFollowing last week’s removal of Prime Minister Karim Massimov, Kazakhstan’s President Nursultan Nazarbayev yesterday announced that his daughter Dariga Nazarbayeva had moved from the post of Deputy Prime Minister to take up a role as deputy in the Senate. Although (more…)

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Chinese investors lead surge as Kazakh FDI on course to hit $10bn for 2016

Chinese pm and Kazakh presidentKazakh FDI: With some $24bn of Chinese project investment in the pipeline over the coming years. the Astana is expecting FDI into Kazakhstan to hit $10bn this year, according to Kaznex Invest Chairman Borisbiy Zhangurazov, almost (more…)

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Shariya Review Bureau to help Zaman roll Islamic banking across CIS

Shariyah review bureau logoIslamic banking in CIS: Kazakhstan’s Zaman Bank has appointed the Shariyah Review Bureau (SRB) to help roll out its portfolio of Shariah-compliant financial products and services across the countries of the CIS, it announced last week. (more…)

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Klebanov rationalises shareholding in readiness for Kazakhtelecom IPO

KazakhtelecomKazakhtelecom IPO: In a move that should pave the way for the flotation of Kazakhstan’s largest telecommunications company, Kazakh businessman Alexander Klebanov has consolidated his 24.4% stake in Kazakhtelecom into his UK-based Sobrio holding after (more…)

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Silk Road Fund eyes up Glencore’s Kazakh mine in Chinese gold rush

Glencore's Vasilkovskoye mineChina’s state-backed $40bn Silk Road Fund has teamed up with the China National Gold Group Corporation to explore the possibility of putting an offer in for Glencore‘s Vasilkovskoye mine, according to reports in China Daily last week. The sale could pocket (more…)

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Chevron bucks market to invest $37bn in Kazakhstan’s Tengiz oil field

 

Tengiz oil fieldChevron affiliate Tengizchevroil (TCO) is to go ahead with the development of its Future Growth and Wellhead Pressure Management Project (FGP-WPMP) to ramp up crude oil production at Kazakhstan’s Tengiz oil field from 27m to 39m tonnes a year at a cost of $37bn, Kazakhstan’s Energy Ministry and its foreign partners confirmed yesterday.
The Tengiz expansion (more…)

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Khorgos – Eastern Gate SEZ operational in months

Khorgos Free Economic ZoneThe Khorgos – Eastern Gate SEZ, the massive logistics and industrial zone on Kazakhstan’s border with China, will be up and running by September according to the Managing Director of the country’s Samruk-Kazyna sovereign wealth fund. Development of the zone, (more…)

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Turkic Council draws up proposals for common customs procedures

Turkic Council MapThe member states of the Turkic Council — Azerbaijan, Kazakhstan, Kyrgyzstan, and Turkey – are in the process of drawing up proposals for a common customs procedures and standards for the movement of goods, its Secretary General Ramil Hasanov said this week as they look (more…)

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Xinjiang and Kazakhstan and $2bn trade package

Xinjiang and KazakhstanXinjiang and Kazakhstan have signed a package of five energy, agricultural, and industrial projects worth more than $2 billion as Beijing moves ahead with its One Belt, One Road strategy of developing trade and transport links across Asia and beyond. The deals were struck (more…)

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101 Kazakh mineral deposits to be put up for auction

Gold mining in KazakhstanKazakh mineral deposits: The Kazakh government is to hold an auction over 100 mineral deposits in June, its Deputy Minister for Investment and Development of Kazakhstan Albert Rau said today. The auction will include: (more…)

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Fitch downgrades Kazakhstan

Kazakhstan Stock ExchangeFitch downgrades Kazakhstan: Fitch Ratings has downgraded Kazakhstan’s long-term foreign currency Issuer Default Rating (IDR) from BBB+ to BBB and its local currency IDR from A- to BBB.
“Off-balance sheet spending, (more…)

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Moody’s downgrades Kazakhstan credit rating on effect of oil price drop

Astana financial districtKazakhstan credit rating: Moody’s Investors Service has downgraded the issuer and senior unsecured ratings of the Government of Kazakhstan from Baa2 to Baa3, the international credit rating agency announced today.
The two key drivers (more…)

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Kazakhstan and Iran sign $2bn cooperation package in Tehran

Nazarbayev arrives in TehranKazakhstan and Iran this week signed up to a package of 66 joint projects worth up to $2bn as President Nursultan Nazarbayev met up with President Hassan Rouhani in Tehran, the Kazakh leader said yesterday. The agreements relate to developments (more…)

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Kashagan oil field production to resume in autumn

KashaganProduction at Kazakhstan’s massive Kashagan oil field is to resume in the autumn more than two years after a gas leak took it out of commission, the Caspian Pipeline Consortium (CPC) announced this week. Discovered over a decade ago, (more…)

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