Halyk Bank swallows up rival as consolidation of Kazakh banking sector begins

In a move that the authorities in Astana hope will help stabilise Kazakhstan’s banking sector,  the country’s two largest  banks have merged, with the Halyk Bank swallowing up  Kazkommertsbank in a deal worth  $650m. Owned by  Timur Kulibayev who is married to President Nursultan Nazarbayev’s daughter Diana, it announced on Wednesday that  it had acquired a 96.8% share in its rival, giving it control of 37% of the country’s banking sector.  
The deal has been on the cards for several months and officials are hoping that it will be the first of several  mergers that will help strengthen the sector.  Dozens of Kazakh lenders are struggling with non-performing loans that stem from the 2008 financial crisis and the fallout from the 2014 collapse in oil prices. Central Asia’s banks have been put under further scrutiny  in recent months after the default and ongoing restructuring of the  International Bank of Azerbaijan which sparked fears of a wider domino effect across the region. 
But the consolidation of Kazakhstan’s banking sector has been a priority for Astana since Daniyar Akishev was appointed Chairman of National Bank of Kazakhstan in November 2015. “It’s easy to operate in a banking system that has been shaped by oil prices of more than $100 a barrel, but it is much harder to find space for commercial banks in a shrinking economy, based on oil at $50 a barrel. Therefore, a reduction in the number of banks is an inevitable process,” he said soon after taking up his post. “Our first priority is the establishment of a healthy, well-capitalised banking sector,” he concludes. “This is the foundation on which everything else can be built. Without [such a foundation], credit growth would amount to building sandcastles.”        

Source: FT