Based on Reuters news agency’s information, the Kazakh authorities are urgently looking for a buyer to take over Tsesnabank in order to save it from financial collapse which, by the looks of it, is to happen quite soon. And even though they have pumped almost $2 bln of the public funds into the bank, it still does not seem to be enough. On top of this, the bank’s management is fleeing.

On January 21, 2019, the Kazakhstan Stock Exchange (KASE) informed that Tsesnabank JSC whose securities are officially listed at the KASE had announced the resignation of Bayzhanov U.S. (independent director) and Fogel V.G. from the Board of Directors.

The text of the announcement shows that the shareholders’ decision was made on January 16, 2019.

Consequently, only three persons constitute Tsesnabank’s Boards of Directors at the present: Mescheryakov Nikolay Ilyich, Chairman, Babayan Eduard Getenovich, independent director and Ulf Wokurka, Chairman of Management Board since September 2018. Note that the first two, judging by their biographies, are the people closely associated with the majority shareholders represented by former Head of the Presidential Administration Adilbek Dzhaksybekov and his family and the third is summoned by the first two to save the bank from falling.

Judging by the information on Tsesnabank website, for instance, the financial report of December 31, 2018, one may conclude that the bank had remained standing. Despite the serious problems of last year that began with the massive withdrawals of the quasi-governmental agencies’ deposits that put the bank on the verge of bankruptcy. What is more, having sustained serious losses in terms of its assets and liabilities, the bank, nonetheless, was able to increase the stock capital and remain profitable. 

However, the fact that Tsesnabank’s directors and management are leaving (the fact that some malicious tongues may describe as “rats fleeing the sinking ship”) testifies that the real state of affairs in the bank is in fact much worse than what the official report shows.

Note that the previous changes in Tsesnabank’s Board of Directors happened on January 9, 2019 when Nikolay Mascheryakov replaced Kayrat Satylganov as the Chairman. Besides, Yerzhan Tadzhiyakov (member of the Management Board from September 2013 to May 2018) also left the Boards of which, by the end of his employment, he was the Chairman.

In his turn, Kayrat Satylganov became a member of Tsesnabank’s Board of Directors in April 2013 and was appointed its Chairman on September 24, 2018. At that point, another five persons were on the Board of Directors: Ulf Wokurka, Nikolay Mescheryakov, Viktor Fogel, Eduard Babayan and Ulan Bayzhanov. In three months, of these five people, only three would remain.

If we add the frequent dismissals of the members of Tsesnabank’s Management Board* to this personnel drain, we will have to conclude that the real financial standing of the bank, despite the massive governmental support that is still in progress, remains extremely precarious if not critical.

* Currently, only five persons remain the Boards members; of them, two are long-timers, two are “newcomers” and, as for the fifths, his biography is absent from the bank’s official site.

Our assumption can be confirmed by the latest publications in the press. For instance, site Azattyk, in its weekly review, announces the following.

“As stated on UK news agency Reuters’ website, “the Kazakh The Kazakh authorities are urgently looking for a bank to take over no. 2 lender Tsesnabank as they believe it needs new financing to prevent a collapse” writes the agency citing “three anonymous sources familiar with the discussions”.

“Officials from the government and central bank have approached at least three other Kazakh banks and hope to tie up a deal in February, the sources said. They are offering financial incentives for any bank prepared to take it over.

The authorities want to avoid liquidating the bank, which has over $1 billion in retail deposits and received a $1.8 billion state bailout in September, because of the impact on the wider economy, the sources said”, writes Reuters”.

At the same time, on January 28, 2019, the Kazakh media resources published the announcement that “the Problem Loans Fund is planning to list the securities in the amount of 604 bln tenge for the purpose of buying out Tsesnabank’s “toxic” assets”. The listing is to take place at the KASE. With that, “all the funds received from the listing are to be used for buying Tsesnabank’s assets”.

The question that remains is who will be the one to take the heat now.