On 4 May, 2021, Kazakhstan’s Agency for Regulation and Development of Financial Market granted the Subsidiary Bank of the National Bank of Pakistan the permission for voluntary liquidation. On the next day, the Agency informed the public that the bank’s licences to conduct banking and other operations had been terminated.
Those who wish to learn about how the Subsidiary Bank of the National Bank of Pakistan had appeared in Kazakhstan, what operations it had been involved in and what successes it had had may find all the relevant information in the press, for instance, in an article of the Capital Centre of Business Information titled «Another Bank Is Leaving Kazakhstan’s Market». As for us, this event serves as yet another reason to go back to the topic that is extremely sensitive for Akorda, the National Bank of Kazakhstan and the Agency for Regulation and Development of Financial Market.
This topic is called Capital Bank Kazakhstan JSC.
We have written on this financial institute and its former «partner» AsiaCredit Bank JSC on numerous occasions. You will recall that the latter’s banking and stock market licences were revoked on 11 February, 2021.
In our publication of 17 February, 2021 «Nurbol Nazarbayev’s Bank Drowns In Fine», we wrote (quoting) –
«Now when the problem called AsiaCredit Bank JSC has almost been solved, the time has come to ask this simple question — why did Akorda and the Library not go for the drastic measure of revoking the licenses of both „drowning“ banks (Capital Bank Kazakhstan JSC and AsiaCredit Bank JSC) simultaneously?
In our opinion, it may have to do with a strong resistance on the part of the said Bolat Nazarbayev who understands full well how badly the collapse of both banks may affect his son. So, willingly or not, the Agency for Regulation and Development of Financial Market is now „cutting the tail“ piece by piece.
And since Capital Bank Kazakhstan’s shareholders’ chances to find the funds for the bank’s rescue are very small, it is quite possible that the bank’s license will be revoked in a couple of months.
Therefore, all that is left to do is register a sad fact: the Agency for the Regulation and Development of Financial Market (reconstructed last year) has continued the unfortunate tradition created by its predecessors a long time ago. Instead of performing the function of the regulator, it executes political will of the power holders. And it looks like there is no way of getting around it».
Even though, for the past couple of months, Capital Bank Kazakhstan JSC has been flying under radar, its latest financial report shows that, as of 31 March, 2021, it was continuing its slow «drowning».
For instance, the total volume of the bank’s asserts had shrunk from 43 bln tenge as of the end of 2020 to 40.6 bln tenge as of the end of the first quarter. With that, it is not at all the clients’ funds that serve as the source of the bank’s monetary resources (the clients’s funds had shrunk from 10.2 bln tenge to 9 bln tenge) but the «funds of credit establishments» — basically, in the first quarter of this year, their volume had not changed and constituted 15.5 bln tenge.
As for the retained loss, this figure had grown by a billion tenge — from 4.4 bln tenge as of 31 December, 2020, to 5.4 bln tenge as of 31 March, 2021.
If we assess the situation in Capital Bank Kazakhstan JSC in terms of the number of the «disciplinary measures» introduced by the regulator, the picture looks a little bit brighter. According to the information available on the website of the Agency for Regulation and Development of Financial Market, the bank was last fined on 22 December, 2020, while the latest written order to improve the bank’s financial standing was issued on 18 February, 2021.
We have not found any detailed data on the profitability (unprofitability) of Kazakh banks on the regulators’ websites. We suspect, however, that, after the closure of the Bank Subsidiary of the National Bank of Pakistan, Capital Bank Kazakhstan JSC remains the last loss-making financial institute in the country. In our opinion, its sole shareholder and the Elbasy’s relative that’s standing behind him are unlikely to find the money to increase the bank’s capital and let it breath again.
This begs the question — why would the Agency for Regulation and Development of Financial Market not revoke its licence?
May be they choose not to see it and have their hand in it?
