On Bakhytbek Baiseitov’s big problems

Merging of JSC Tsesnabank and JSC Bank CenterCredit that was announced back in 2017, might not go through, if the founder of BCC Bakhytbek Baiseitov doesnt invest 300 mil. USD into the bank. Insiders have told us about the conditions of the deal and problems of the bank executive.

Reports that, JSC BCC Invest, daughter company of JSC Bank CenterCredit, increased the number of announced common stock by 5 billion units, up to 8363761847 as well as paid their investors dividends for 2010-2016 didn’t spark interest at the market. Even though in the latter case the talk is of a large sum of 2823 bil. tenge. At the same time, questions arise: why JSC BCC Invest suddenly decided to pay dividend to their holding company, JSC Bank CenterCredit, and not for one but for full six years, and so abruptly almost by three times increased their portfolio of common stock?

As for the answers to the first two questions, they already exist: On Jan. 29 2018 JSC Bank CenterCredit informed the market and stock exchange about a purchase of 130851890 of common shares of JSC BCC Invest at a price of 2,0529 tenge per share. Thus, almost three billions tenge went around and returned to their starting position. I.e. in essence a pumping up of capital a daughter company took place.

Consdiering the fact that Bank CenterCredit itself is trying to attract investments from the market, for example by the way of placing of 10-year old bonds on Kazakhstani stock exchange for the overall sum of 10 bil. tenge, and not very successfully, seems like the bank needs capital.

This conclusion is proven by our insiders. Based on their information, majority stockholder of JSC Bank CenterCredit Bakhytbek Baiseitov, who after the departure of foreign investors, represented by Korean banking group Kookmin Bank and EBRD, owns 43.89% of common stock, ended up under a severe pressure from the second stockholder – JSC Tsesnabank. The latter, we remind owns 29.56% of common stock of the financial institution.

The thing is, that financial situation of JSC Bank CenterCredit is not as sunny as it could be assumed from the official reports. But if earlier Baiseitov managed to if not hide this – since National bank of RK was aware of all that was happening – but let’s say not publicize it now the founder of Bank CenterCredit ended up in a trap. This is because government support in the form of 60 bil. given to the bank by the regulator is clearly not enough for its rescue, there also needs to be help from the Jaksybekov family, controlling JSC Tsesnabank.

At the same time, based on insider information, owners of Tsesnabank insist that Bakhytbek Baiseitov attract or invest a capital of around 300 mil. USD into the bank. Otherwise, merging of JSC Tsesnabank and JSC Bank CenterCredit which was announced in 2017, will be conducted at conditions disadvantageous to him or won’t happen at all.

Until last year, Baiseitov managed to maneuver, both because of his ties in Akorda and because the Korean banking group Kookmin Bank couldn’t afford sudden moves. Because for many years it was broadsided in its home-country for unsuccessful investments in Kazakhstan, and thus, a new high-profile scandal could seriously complicate the position of both financial isnitute and its top-management.

And now Baiseitov is opposed not by a foreign investor, tied by hands and feet by corporate rules of conduct and concerns about tis image at home, but by the family of one of the closest allies of president Nazarbaev who has in its disposal much more serious influence in Akorda and most importantly, serious arguments in inner corporate dispute.

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