NBK sparks off a digital banking wave

Kazakhstan's banks are striving to keep pace with global developments in digitization:

The Republic of Kazakhstan, formerly a part of the USSR and subsequent to of the Commonwealth of Independent States, is the world's 9th largest country by land area and the world's largest landlocked region. It is known to be generating 60% of the region's GDP, primarily through its oil and gas industry. The country has a fairly developed 2-tiered banking system. The apex bank, the National Bank of Kazakhstan is the central bank of the country and is directly under the country's President. The second tier consists of 21 commercial banks, including one state-owned bank and 14 banks in which foreigners hold 30% or more of the bank's shares. The central bank is mandated with the overall supervision of the banking sector, insurance, pension system, stock market, microcredit organizations, debt collection agencies and credit bureaus.

TOWARDS STABILITY

Periodic reports of the International Monetary Fund for Central Asia had described the banking sector in Kazakhstan as saddled with weak underwriting and reporting standards, poor payment culture, related party and directed lending, opacity of ownership, and reliance on state support. Responding to these remarks, the Kazakhstan Government had initiated several bank bailouts to ensure stability and facilitate the sector's consolidation. However, experts are of the view that these have just mixed results. One of the direct fallouts of these bailouts is that Halyk Bank, the country's largest private bank, is today in control of as much as 35% of all banking assets following a series of government-facilitated mergers.

Today banking sector recovery is a top priority for the government, and the central bank has adopted policies to strengthen oversight and capital requirements, de-dollarize, resolve bad assets, and encourage consolidation.