In the article «On the Fate of the Banks of Bolat Nazarbayev’s Son» published on September 9, 2020, we have reviewed the situation around Tengri Bank JSC, a small yet troublesome financial institute, and assumed that this bank would probably manage to survive. Alas, we we wrong.
For a better understanding of the context, let us quite some passages from our publication.
«On September 3, 2020, Centre of Business Information Capital announced that Timur Kuanyshev’s family had been taken off the list of Tengri Bank’s shareholders. The publication says that the event itself took place on August 24, 2020, but Kuanyshev left the Board of Directors of this financial institute as early as May 15.
The publication also informs that Tangri Bank’s majority shareholder, Punjab National Bank, has taken measures to stabilise the situation with liquidity and has employed an outside consultant from amoung «the big four» for assessing the situation. Based on the results of the consultant’s report, a plan to stabilise the bank’s operations will be developed.
In view of all this, it looks like Tengri Bank has a chance to survive. Especially since the National Bank of the Republic of Kazakhstan and the Agency for Regulation and Development of Financial Market of the Republic of Kazakhstan look in favour on it. The aforementioned publication quotes the Agency’s Deputy Chairman Oleg Smolyakov who, back in February 2020, said:
«There is no resolution or proof that Tengri Bank has gone bankrupt. Due to the temporary difficulties, the bank has established certain cash withdrawal limits. We know about this problem and believe that it is a task, first of all, for the shareholders to support their bank. Tengri Bank has got a rather prominent shareholder with a good rating. So, we are now communicating and, if necessary, all the compliance enforcement measures will be applied to the financial institute».
Nonetheless, as life has proven once again: the market and experts believe and the Agency for Regulation and Development of Financial Market disposes. On September 17, 2020, the agency decided to revoke Tengri Bank’s licence for conducting banking and other operations including those at the stock market.
Let us quote the corresponding Decree number 80:
«Having reviewed the data of the Department of Banking Regulation and on the basis of Section 1 of Article 47-2, Subsections 7) and 15) of Section 1 of Article 48 of the Kazakh Law on banking operations as well as Subsection 5) of the second part of Section 22 of the Kazakh Law on regulation and development of financial market approved by Presidential Decree 203 of November 11, 2019, the Board of the Agency for Regulation and Development of Financial Market of the Republic of Kazakhstan (hereinafter — Agency) hereby DECREES:
1. To revoke Tengri Bank’s licence 1.2.54/43 issued on February 3, 2020 for conducting banking operations as well as the operations at the stock market starting from September 18, 2020. The licence is being revoked on the grounds of the Bank’s systemic violations of the law of the Republic of Kazakhstan that manifested itself in violating the prudential norms stipulated in the National Bank’s Decree 170 of September 13, 2017 and of the systemic failure to comply with the requirements of the Agency as well as the failure to meet the Agency’s requirements on taking measures for additional capitalisation in order to increase the Bank’s capital base.
2. The Agency’s Chairman is to appoint the Head and the members of the Bank’s temporary administration until the liquidation committee is appointed by the Agency».
Even though Tengri Bank JSC still has a chance to survive if it appeals the Regulation Agency’s decision in court, the likelihood of the latter taking the side of the bank is close to a zero. Judging by the talks that travel Akorda’s corridors, the current top-management of the bank and the representatives of the majority shareholder, Punjab National Bank, had been trying to prevent such a turn of events; they even appeal directly to Prime Minister Askar Mamin and the Chairman of the National Bank Erbolat Dosayev albeit those two had allegedly «tuned out».
In our opinion, the revoking of Tengri Bank’s licence is not going to affect the stability of the Kazakh banking sector. Simply because the market was aware of that was going on and everyone who wanted to do so responded a long time ago by withdrawing their money and closing the financing limits.
On the other hand, the situation looks much less peaceful from the domestic political standpoint.
On the backdrop of AsiaCredit Bank’s and Capital Bank Kazakhstan’s continuing operations, the sad fate of Tengri Bank JSC where a foreign investor was the majority shareholder testifies yet again that it is not so much the money as protection that serves as the key factor of survival in the country. We are talking about the support of a very influential figure and clan. And this is the reality that must be taken into account by any foreign investor that wants to profit off Kazakhstan.
To confirm this, let us present some figures from the National Bank’s official statistical data — a table titled «The Financial Results of Tier-Two Banks as of July 1, 2020».
In our opinion, the data are very indicative and do not require a special commentary.
