Last week, JSC Bank CenterCredit and JSC Tsesnabank announced that they are no longer affiliated and connected legal entities. This means that inter-corporate conflict between Bakhytbek Baiseitov and Dauren Jaksybek  as  a representative of his family, ended with a “divorce”.

We have raised this subject earlier, analyzing the reasons of the strife (see On Bakhytbek Baiseitov’s  Big Problems and providing the forecast of its development (see Bank CenterCredit: Tempers Are Running High). We remind that based on insider information, Baiseitov, who after the departure of foreign investors owned 43.89% of common voting stock of JSC Bank CenterCredit, ended up under severed pressure from JSC Tsesnabank, controlling 29.56% of common voting stock.

Thus, Dauren Jaksybek (son of the head of presidential administration Adilbek Jaksybekov) insisted that Bakhytbek Baiseitov must attract or invest himself 300 mil. USD into capital of JSC Bank CenterCredit, since the real financial situation of BCC turned out to be worse than it looked on paper, and 60 bil. tenge of government aid, received from the National bank of RK in 2017, even though made the situation better, haven’t radically changed it.

Baiseitov, however, refused to make concession, since he wasn’t able to fully carry out justified demand of the second large investor. As a result, hidden conflict has started, that could develop in a number of different ways, including ways that are highly unprofitable and even dangerous for the current majority stockholder of JSC Bank CenterCredit and the top management, since they were opposed by the influential family of Nazarbaev’s administration.

However, eventually things ended quite peacefully. In proving this, we allowed ourselves to quote official messages of financial institutions, thankfully they are short.

In the press-release of JSC Bank CenterCredit situation is explained in the following way:

“Starting from March 14 2018 JSC Bank CenterCredit and JSC Tsesnabank are no longer affiliated entities. Press-service of the JSC Bank CenterCredit (from here on ‘bank’) reported on the deal of sale of common stock of the bank. The entire package of common stock of the bank, belonging to JSC Tsesnabank with a share of 29.5% from the overall number of common stock put out by the bank, was sold to large participants from JSC Bank CenterCredit, Baiseitov Bakhytbek, Li Vladislav and a group of invididfuals (minority stockholders). Based on the result of conducted deal, share of Bakhytbek Baiseitov was 48.07% from the overall number of common stocks put out by the bank, Vladislav Li’s share was 10.05% – said chairman of the board of the bank Galim Husainov. Earlier, in the letter dated Feb. 15 2018, bank notified of granting Vladislav Li a of National bank of Republic of Kazakhstan for acquisition of status of a big-time participant of the bank. Moreover, the bank has reported on the finishing up of the procedure of buying out of the preferred stock, which could be converted into common stock of JSC Bank CenterCredit, based on the act of the board of directors of the bank no 223 from Dec. 20 2017. Thus, as of March 14 2018, 39 044 84 preferred stocks of the bank were bought out, including 8 366 560 from JSC Tsesnabank and  27 067 109 from JSC Finance Holding Tsesna . Starting from Mar. 14  2018 JSC Bank CenterCredit and JSC Tsesnabank are no longer affiliated entities – the official statement says”.

In their turn JSC Tsesnabank and JSC Finance Holding Tsesna report the following:

“On Mar. 14 2018 JSC Tsesnabank and JSC Finance Holding Tsesna have completed the sale of the entire package of shares of JSC Bank CenterCredit to a group of Kazakhstani buyers, namely: 28 023 250 of common shares, which is 29.5% from the number of placed common shares of JSC Bank CenterCredit and 35 433 669 preferred shares, which is 90.2% of all placed preferred shares of the JSC.

The group of Kazakhstani buyers, among others includes Mr. Baiseitov B.R. and Mr. Li V.S as well as JSC Bank CenterCredit as part of preferred share buyers.

Thus, since Mar. 14 2018 JSC Bank CenterCredit is no longer affiliated or connected to JSC Tsesnabank and JSC Financial holding Tsesna. JSC Tsesnabank and JSC Bank CenterCredit continue their activity as independent and unrelated financial entities”.

The following follows from the text of abovementioned messages:

1. Bakhytbek Baiseitov was able to personally acquire only a small package of common stock – 4.18% out of 29.5% or one 7^th from the br.
2. The largest buyer of common voting stock was Vladislav Li who, earlier headed the board of JSC Bank CenterCredit for many years and thus isn’t interested in the inter-corporate conflict developing into criminal investigation. He acquire 10.0% of common voting stock or one third of it.
3. Minority shareholders have entered Bank CenterCredit, , the size of whose packages is less than 5%, and thus their individual names aren’t disclosed in press-releases.
4. Preferred stock was bought out by Bank CenterCredit itself, in order to lower individual expense.

Since there is no information online regarding what price common voting and preferred stock of  Bank CenterCredit was sold and bought at, we cannot estimate how much the divorce with Tsesnabank cost Bakhytbek Baiseitov and his partners. However, the divorce itself is their undeniable victory and the loss of Adilbek Jaksybekov’s family.

Based on insider information this happened mainly because Nazarbaev himself interfered in the conflict. Presumably, when the head of administration reported to him about the situation and asked a permission for a shake-up, the president resoundingly refused to do this, since the domestic policy situation in the country and the state of affairs in the banking sector were bad as is.

As a result Jaksybekov family had to settle for a civilized resolution of the problem, which sat well with Baiseitov. Moreover, we concede that the sale of stock of JSC Bank CenterCredit to Tsesna group and the readiness to unite tow banks with a sly maneuver, were carried out only to secure inclusion of the Bank CenterCredit into the program of government support from the Natonal bank of RK. When that happened and 60 bil. tenge were transferred to the accounts, the need for the second shareholder simply evaporated.