State takes the lead in Kazakh banking sector

Kazakhstan’s beleaguered banking sector is getting back on its feet, thanks to increased activity by state banks, and growing levels of FDI, report Shayla Walmsley and Julian Evans.

“It’s been a fascinating ride – to see Kazakh banks go from CIS darling to whipping boy,” says Ian McCall, a director at Argo Capital Management.
For several years, the Kazakh banking sector enjoyed a reputation as the best banking sector in the former Soviet Union. It was mainly privately-owned, well-regulated and relatively transparent.
The top Kazakh banks took advantage of their great reputation to borrow abroad. And how they borrowed. At the end of Q1 2008, overseas debt represented 45% of the sector’s liabilities. In 2006 alone, Kazakh banks borrowed US$18bn on the external debt market.