In the first part of our research, we have registered the chronology of the events and then presented a general picture of the developments that surrounded Tsesnabank from March 14, 2018 to February 7, 2019, in other words, for the period of approximately 11 months. Now we will try to assess its undercurrents taking into consideration the balance of power in the country’s ruling elite, the capabilities of the key internal political players and Akorda’s existing decision-making mechanism.
Let us start with Chairman of the Management Board of NWF Samruk-Kazyna Akhmetzhan Esimov.
Not only does he happen to be Nursultan Nazarbayev’s nephew but is considered one of the closest allies of the latter. With that, he is thought to be an experienced top-executive whom the Leader of the Nation has entrusted with rather challenging projects including the extra-controversial ones due to the intercrossing of the interests of rather influential political figures and elite clans. The country’s largest holding Samruk-Kazyna just happens to be among them.
The urgent necessity to reduce the external debt of NWF Samruk-Kazyna was, of course, the formal reason for Esimov’s financial «cruelty» towards Tsesnabank JSC. And this goal had been reached. At the meeting devoted to the results of the state holding’s operations held on January 22, 2019, Akhmetzhan Esimov announced that the group’s total debt had been reduced by 1 trillion tenge.
But we believe that even the authorities and influence power of Esimov who, by the way, has always been quite cautious in his words and actions was not enough to lobby the decision on withdrawing one bln USD from the bank of which the acting Chief of the Presidential Administration was a co-owner.
***
We have no doubt that the National Bank of Kazakhstan and its Chairman Daniyar Akishev understood full well that, as a consequence to the deposit withdrawals, Tsesnabank JSC would end up in an extremely complicated financial situation. Nonetheless, the corresponding decision had been made and put into practice. This means that Nazarbayev either decided to let Dzhaksybekov go down the tubes himself or sanctioned a similar initiative of some of his allies (relatives).
As a result, the Chief of the Presidential Administration was put in a position when he had to choose between a high governmental post and his private business. Since he was no longer able to hold on to both.
We are not to try and formulate the terms and conditions of that unofficial agreement that, undoubtedly, was reached between Adilbek Dzhaksybekov and Nursultan Nazarbayev’s representative. (Recall that the latter always avoids a direct contact when dealing with complicated and sensitive issues choosing the position of an arbiter). However, by the looks of it, this agreement included the measures on Tsesnabank’s rescue. And it was these measures that had been put into practice already after Dzhaksybekov’s resignation — on September 19, 2018, the Kazakh Government and the National Bank of Kazakhstan made a decision to buy a part of the loans given by Tsesnabank to the agricultural sector in the total amount of 450 bln tenge.
However, the attempts of Tsesnabank’s top-management and shareholders to rescue the financial institute from the failure turned out to be unsuccessful. To a large extent, due to the fact that the information on the bank’s problems was «leaked» to the market and the clients rushed to save their money. According to the information at our disposal, this was helped by certain forces interested in cornering Adilbek Dzhaksybekov and his closest relatives and depriving him of not just his political power but his business as well.
As a result, the problem of Tsesnabank JSC rose before Akorda once again. And it is quite likely that it was at that moment that the very top of the political power decided not only to provide the financial institute with 604 bln tenge of the state support but also to move it into someone else’s hands. One may assume that Adilbek Dzhaksybekov did not agree to this and tried to resist it. And then the people in charge of the bank’s rescue and its simultaneous confiscation put on hold the listing of the Problem Loans Fund’s securities at the KASE.
Judging by the chronology of the events, the final agreement that Dzhaksybekov’s family would eventually leave the business was reached in the evening of January 31 or in the morning of February 1, 2019. And then, the whole process had progressed with cosmic velocity.
The political outcome of what happened with Tsesnabank JSC is that Adilbek Dzhaksybekov (who, a little more than a year ago, was still one of the most influential people in the country and Akorda, the Chief of the Presidential Administration, and Nursultan Nazarbayev’s closest aide) was thrown out of the Leader of the Nation’s immediate circle. Thrown out forever, we believe.
Of course, he and his closest relatives certainly have enough resources to lead a normal multimillionaire’s life in the West and, most likely, the Leader of the Nation will allow them to settle down there if Dzhaksybekov, Sr. would so desire. Not such a bad ending, considering the Kazakh realia.
***
When analyzing the internal political component of the Tsesnabank case, one immediately asks the question — was Adilbek Dzhaksybekov’s resignation from Akorda’s key position of the head of the Presidential Administration and the consequent loss of the control over Tsesnabank JSC a result of the well thought-out, planned and coordinated moves of his opponents or was it simply an accident?
In our opinion, what took place was not at all an accident, however, it is unlikely that Chairman of Samruk-Kazyna’s Board of Directors Akhmetzhan Esimov when making a decision on withdrawing one bln USD from Tsesnabank was planning to drown the financial institute. Moreover, it is unlikely that he could predict that Dzhaksybekov, Sr. would leave his high-rank post and the bank would be moved to someone else’s hands.
Moreover, we are certain that Nazarbayev too was not planning on firing Dzhaksybekov and depriving him of his property. This kind of crude and harsh decision goes against the Leader of the Nation’s policies and practices since he usually tries to stay above the intra-elite conflicts and play the role of the ultimate arbitrator.
It is likely that the problem lied in the fact that Adilbek Dzhaksybekov, by using his unofficial possibilities, had «pumped» Tsesnabank with the money belonging to the state and the quasi-governmental structures. This can be confirmed via the information that Tsesnabank JSC was the biggest creditor of the country’s agricultural sector. For this reason, when Akhmetzhan Eimov was put in charge of Samruk-Kazyna and, based on Nursultan Nazarbayev’s request, started restoring order in the organization, he could not but step on Adilbek Dzhaksybekov’s «pet peeve».
Besides, this was tied with Esimov’s private interests. The thing is that, based on the insider information, Akhmetzhan Esimov is a secret beneficiary of the Ivolga holding and a secret partner of its official owner Vasiliy Rosinov.
The press has published a great deal of materials on the problems of the Ivolga agricultural holding, and not just in Kazakhstan but in Russia too. However, despite all the creditors’ attempts to bankrupt the said structure, no one has been able to do so. At best, they had been able to «pinch off» certain business-structures, elevators, farmlands. In order to understand how big Ivolga’s agricultural business was, we will cite Forbs.kz’ 2013 publication Vasiloy Rosinov: a Quiet Oligarch — text available in Russian.
We cannot say what share of the loans provided to the agricultural sector by Tsesnabank JSC is accounted for by the Ivolga holding although we suspect it is a rather substantial one. So, Akhmetzhan Esimov could have easily overinflate the part of the deposits withdrawn by NWF Samruk-Kazyna from Tsesnabank in order to pressurize the latter. This, however, we repeat, is just conjecture.
One way or another, after the billion-dollar withdrawal, Tsesnabank started experiencing the problems with liquidity. They could have been solved with the help of the National Bank, and the latter did help — it provided Tsesnabank with the credit line in the amount of 150 bln tenge and then increased it to 200 bln.
However, it seems like, at this point, something happened that Akorda had not been able to anticipate. Amid the escalation of the banking sector’s problems that became the reason and the cause for Nursultan Nazarbayev’s angry diatribe directed at insolvent banks and their dishonest owners as well as the revocation of the licenses of Qazaq Banki JSC and Bank Astana JSC, Tsesnabank’s clients started trying to save their money en masse by moving it to other financial institutes.
And then, at this critical for the bank and Dzhaksybekov moment, his opponents seemed to have interfered in the matter and stipulated on what condition they would provide a new state aid package — the resignation of the head of the Presidential Administration. And they did manage to convince Nazarbayev to support this exact scenario.
We do allow for the possibility that Dzhaksybekov, Sr. was not particularly insistent on remaining in the state service since he understood that, in time, he would lose his high-rank post anyway, whereas the loss of his key asset would have deprived him and his family of the possibility to maintain their normal way of life and to have a desirable future.
As a result, on September 10, 2018, Adilbek Dzhaksybekov retired on a pension and, already on September 19, 2018, the Kazakh Government and the National Bank made a decision to buy a part of the loans provided by Tsesnabank to the agricultural sector in the total amount of 450 bln tenge and this decision was put into practice without any problems. However, the snow slip pushed down from the mountains by the billion-dollar withdrawal could no longer be stopped.
Even though Adilbek Dzhaksybekov and his relatives and allies did everything they could to save the situation (among other things, by constantly replacing top-managers), the bank drowned. When it became clear that the bankruptcy was unavoidable, the former head of the Presidential Administration asked Akorda for the help once again. And he did receive it, but probably on the condition to sell Tsesnabank JSC.
Judging by the further developments including the delay of the PLF’s securities’ listing from January 25 to February 1, the parties involved were eagerly negotiating the price of 99,5% of Tsesnabank’s shares. And it looks like Adilbek Dzhaksybekov refused to accept the suggested price. In order to convince him, the buyer of the PLF’s securities (this could only be the National Bank of Kazakhstan) put the brakes on the buying of the securities in the amount of 604 bln tenge. As a result, the KASE trading session took place on February 1 after which, on February 6, 2019, 604 bln tenge was received by Tsesnabank JSC.
As for the new Tsesnabank’s end owner, it is represented by the group of companies that include Nazarbayev University, Nazarbayev Intellectual Schools and Nazarbayev Foundation. Since the First President and the Leader of the Nation is the head of the latter, it turns out that the former property of Dzhaksybekov’s family was moved into the hands of Nursultan Nazarbayev himself.
One should not take notice of the fact that the government is registered as the official owner of the group: as long as Kazakhstan has the authoritarian political system and the super-presidential vertical led by Nazarbayev, his placeman or relatives, the role of the government in the country will remain purely ceremonial.
However, if the head of that same authoritarian political system and the super-presidential vertical, is replaced (albeit, so far, just nominally), it will lead to the replacement (partial or complete) of the group of people that rule Kazakhstan.
Today, the process of power transition from Nursultan Nazarbayev to his has not yet been finished, however, sooner or later, it will come to an end. And then we will see that Tsesnabank’s case may be repeated again And not just once, at that.
Note that Tsesnabank’s fate may be repeated by not only potential bankrupts, but by those banks that look quite all right on the surface. Simply because the decision on replacing their owners will be made not by the Leader of the Nation but by somebody else (and not necessarily by the acting President of Kazakhstan).
And then, the «bludgeon» called the Asset Quality Review (AQR) will become that magical cure that will help to perform a miracle — to conduct yet another property repartition in the country.
