The 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%.
Asahi Group Holdings, the Japanese brewer and soft drinks manufacturers, yesterday agreed in principle to acquire Anheuser-Busch InBev’s operations in five Eastern European countries for around $7.8bn, three months after the Belgium-based brewer and beverage company took control of the assets after its $100bn merger with SAB Miller.
The deal, which will include the Czech Republic’s iconic Pilsner Urqull brand, is set to go down as one of the biggest acquisition of overseas brewing operations by a Japanese company. AbInBev’s sale of SAB Miller’s East European assets – which also include two other Czech-based brands in Velkopopovický Kozel and Radegast, the Šariš and Topvar breweries (Slovakia), Tyskie (Poland), Ursus, (Romania) and Dreher (Hungary) – was a precondition of the European Commission’s approval of the merger.
Asahi saw off rival bids from both Western private equity funds and Chinese brewers, and regards the acquisition as a platform from which to expand its global operations. Two months, ago it also bought SAB Miller’s western European Peroni and Grolsch brands, and acquisitions are part of its efforts to offset slow growth in its home market.
According to statement released by the company this week, the acquisition will lift its overseas sales as a proportion of total sales from 16% in October to almost 25%. With the Polish market in particular characterised by heavy discounting and stiff competition, however, question marks remain over the premium price that Asahi is seen to be paying for its market entry.
Just weeks after snapping up the Russian government’s stake in Bashneft for around $5bn and days after the Qatar Investment Authority and Glencore announced that they were to buy a 19.5% stake in the energy giant from the Russian government for $11bn, Rosneft was in the news again today as it announced that it had agreed to pay Italian oil and gas group Eni $1.125bn for a 30% stake in the offshore Shorouk concession.
Russian President Vladimir Putin took to the TV airways yesterday to celebrate the news that the commodity trader Glencore and Qatar’s QIA sovereign wealth fund – Glencore’s largest shareholders – had agreed to buy Moscow’s 19.5% stake in the state-run Rosneft oil giant for a figure Putin put at $11bn, boosted by what he described as “the rising trend in oil prices.”
The transaction was so big that Putin specifically asked Sechin to work with the Finance Ministry and central bank to ensure that it did not destabilize the currency market when the proceeds were converted into roubles. The rouble gained against the dollar in late trading after the deal was announced. and shares in Rosneft jumped by 6.4% on the news.
Putin haled the surprise deal as the “largest acquisitions in the oil and gas sector in the world in 2016.” It is certainly the biggest foreign investment in Russia since the crisis in Ukraine and comes little more than a year after Glencore Chief Executive Officer Ivan Glasenberg had to go cap in hand to his shareholders for a cash injection. Qatar’s involvement also marks a rare venture of an OPEC member into the Russian energy sector.
Putin was joined on air by his long-term ally and Rosneft CEO Igor Sechin who thanked the President for his part in brokering the deal which, he said, only “became possible thanks to your personal contribution,…..the negotiated price is in our view the maximum possible with the minimum discount of 5% to market prices.” Financing will be provided by “one of the largest European banks,” he added, without specifying which one.
The deal comes at the end of an eventful few weeks for Russia’s privatisation programme which has seen Economy Minister Alexey Ulyukaev dismissed and put under house arrest, accused of taking a bribe to end his objections to Rosneft taking part in the privatisation of Bashneft; and Deputy Finance Minister Alexei Moiseev announcing that hundreds of SMEs were likely to put up for sale next year as Moscow scrambles to raise cash to fill its $21bn budget deficit.
The new deal will go a long way to reducing that debt, but with Rosneft and Sechin himself subject to the sanctions imposed by the West after the annexation of Ukraine, Glencore announced that it would be “fully ring-fenced” from exposure to the Russian state company, apart from a 0.54% “indirect equity interest.”
Russia will retain a controlling stake in Rosneft after the deal, while BP owns a further 19.75% stake in the company.
Golden Globes: The Dalian Wanda Group, the real-estate conglomerate owned by Chinese billionaire Wang Jianlin, has finalised deal to buy the American entertainment production company Dick Clark Productions in its entirety for $1bn, it announced yesterday.
The acquisition is the Group’s third significant deal in the US entertainment sector in a year after it paid $3.5bn for the California-based Legendary Entertainment in January and $650m for AMC Theaters (headquartered in Kansas) in July, but this is its first foray into television. “Obtaining top television production rights brings about complementary and coordinated development for Wanda’s current focuses on the film, tourism, and sports industries,” the Chinese firm said. The American company’s management team “would remain in its entirety”, it added, and that they had signed “a long-term operation target agreement with the management.”
While a group of US Congressmen have already accused Wang of being one of Beijing’s “state champions” earlier this year, the Chinese tycoon prefers to see himself as an angel investor who can help struggling US entertainment companies capitalise on the huge Chinese market. He is on record as saying that he intends to increase Dalian Wanda’s share of the world’s movie theatre seats from 13% to 20% by the end of the decade.
Wang is also in a struggle for with Disney for domination of the Chinese theme park sector and has made clear his intention to be operating 20 parks across China by 2020. Earlier this year, Wang, who is worth around £23bn according to Forbes, wants to open six more theme parks in the next three years and have 15 in China by 2020. The first of these – the 200-ha Wanda Cultural Tourism City – opened in Nanching in September and features what is claimed to be the highest and longest roller coaster in the country. It has also infuriated senior Disney officials after Captain America and Snow White were spotted milling around with guests on the opening day.
Wang is defiant. ‘This craze for Mickey Mouse and Donald Duck is over, the period when we would blindly follow where Disney led has been gone for years,” he said. “A tiger cannot take on a pack of wolves.”
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The Hong Kong-based REX Global Entertainment Holdings has purchased a 30% stake in Russia’s Yota Devices, best known for its dual screen YotaPhone and mobile broadband services, for $46.5 m. Under the company’s new ownership structure the privately owned Rusian investment fund Teleconet Capital, the state-owned Rostec and (more…)rbth Read More»
Chinese wine imports: China’s Yantai Changyu Pioneer Wine is looking to expand its network of overseas wineries and to drive up imports into its home market over the next five years after last year’s acquisition of a majority stake in a Spanish Rioja producer, a senior executive said this week. The company is (more…)reuters Read More»
The Austrian oil group OMV is putting its Turkish subsidiary Petrol Ofisi up for sale, it announced last Friday, as part of a strategy to dispose of non-core assets. OMV has decided to focusing on growing its upstream crude oil and natural gas production operations and its integrated downstream refining, sales and distribution businesses. Petrol Ofisi’s (more…)reuters Read More»
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