On November 10, 2020, Kazakh media resources informed the public on the arrest of former managers of Tengri Bank JSC. These managers were but hired employees although the bank lost its license in September because of the activities of the shareholders to whom it had provided bad loans. We at KZ.expert cannot help but wonder why the arrests happened the way they did.

Here is a quote from a publication of the Capital business information centre titled “Ex-Managers of Tengri Bank Arrested”.

“Former Deputy Chairman of Tengri Bank’s Management Board Bakhtiyar Ilyasov and former Deputy Head of the bank’s Almaty Branch Aset Zhadykov have been arrested. This information has been confirmed by the Ministry of Finance’ press-service.

“We confirm this fact and will release the rest of the information a little later. Currently, the case is being handled by the Financial Monitoring Committee. The additional information will be released a little later by the Almaty Department of Economic Investigations)”, says the press-service of the Agency.

You will recall that Tengri Bank’s banking license was revoked by the Regulator in September 2020”.

Here is a quote from a website called LS titled “Tengri Bank’s Banking Operations License Revoked” reposted at the National Bank’s official website (text in bold by KZ.expert).

“Tengri Bank’s licence to conduct banking and other operations has been revoked, reports LS.

The decision was based on the following -

– the systemic (three or more times in 12 consecutive months) violations of the prudential norms and (or) other obligations related to the adhering of the rules and the limits;

– the systemic (three or more times in 12 consecutive months) non-compliance with the supervisory measures;

– the non-compliance with the supervisory requirements for additional capitalisation.

“According to the decree issued by Kazakhstan’s Agency for Regulation and Development of Financial Market on September 17, 2020, Tengri Bank’s license to conduct banking and other operations is to be revoked. Due to the low share of the bank’s assets and liabilities in the total assets and liabilities of the banking sector (0.3%), the revoking of the bank’s license does not pose a risk for the system in general”, say the Adgency’s representatives. The decline of the bank’s financial standing has to do with the low quality of its loan portfolio. The main part of the bad loans was given to the persons affiliated with bank’s shareholders in Kazakhstan who owned 58% of the loan portfolio during the period from 2015 to 2017.  

“The large share of the non-performing loans (83% of the loan portfolio) had caused the decline of the bank’s assets quality. Starting from January 2020, the bank had suffered a large-scale customer outflow that resulted in the loss of the ability to ensure the required level of liquidity. Starting from March 2020, Tengri Bank had not been meeting the payment and money transfer liabilities. Due to the decline of the bank’s financial standing, the Agency had implemented 11 supervisory measures and completed 36 reports on the administrative violations”, say the Agency’s representatives.

The Agency also notes that, in March 2020, they implemented an enforcement procedure against Tengri Bank’s shareholder and demanded the bank to conduct additional capitalisation in the amount of 23 bln tenge by April 30, 2020. The demand was not fulfilled. In April – June 2020, Punjab National Bank had provided the bank with 16.9 bln tenge that were used to decrease the bank’s client liabilities. As part of the stepped-up supervision, the Regulator had also implemented measures related to the refinancing and collecting of the non-performing loans thanks to which the bank’s liabilities had been reduced by 26.4 bln tenge.

“The absence of an effective corporate management system and the constant corporate debates between the majority and minority shareholders had also played a hand in the worsening of the bank’s financial standing. Given the lack of the shareholder’s intention to conduct additional capitalisation, the Agency has made the decision to revoke the bank’s license”, say the Agency’s representatives”.

It’s no secret that Tengri Bank used to belong to Timur and Alfiya Kuanyshev who, up until recently, have been one of the most high-profile couples in Kazakhstan. By the way, Timur and Alfiya Kuanyshev were the only Kazakhs invited to the wedding of Prince Willian and Kate Middleton.

Later, due to the economic problems, the Kuanyshevs were forced to transfer the control of the bank to a foreign investor, namely, to Punjab National Bank. Now then, as of September 4, 2020, the latter owned 10.8 mln of the bank’s ordinary shares that constituted 41.64% of the total shares listed. At this point, Alfiya Kuanysheva was no longer on the list of the shareholders; she was last mentioned as such on July 1, 2020.

You can learn more on Tengri Bank’s problems and the related twists here and on the Kuanyshev family – here.

We doubt that anyone in Kazakhstan, except perhaps the narrow circle of the people knowledgeable of this case, has noticed that, even though the bank’s license was revoked because of the bad loans 58% of which had been formed within the period of 2015-2017 via providing loans to the persons affiliated to the bank’s shareholders in Kazakhstan, it is the hired manages that have been arrested and not these shareholders.  

Judging by the fact that the Kazakh media and Internet-resources did nothing but reposted the announcements of the Ministry of Finance and chose not to dig any deeper, the Kazakh public is not too curious to learn about the fate of the bank and the Kuanyshev family.

Meanwhile, according to our insiders, the latter have been spoken for by some very important persons. For this reason, the fact that one of the members of this family had been arrested at the airport while attempting to flee the country and placed under house arrest was never made public.

In view of this, we allow for the possibility that the criminal case against the two former Tengri Bank managers, Ilyasov B.A. and Zhadykov A.U. as well as a certain Zhilkibayeva N.M., whose two-month arrests were sanctioned on November 9, 2020, by the Almaty investigative court, is but a stunt aimed to protect the Kuanyshev family and let them avoid the responsibility.

It looks like the Tengri Bank case will eventually be allowed to fade away and led astray the way it happened with the criminal investigations related the LRT project in Astana and the embezzlements at RBK Bank when the key players were hidden behind the backs of those who represented their interests and followed their orders (not forgetting about themselves, of course).