The deal of the decade is completed. Halyk Bank has bought Kazkommertsbank having paid one tenge to Kenes Rakishev and the Samruk-Kazyna National Welfare Fund for their shares. Now it is time to make some preliminary conclusions and ask some uneasy questions.

 But first, we will quote the buyer’s official press-release:

 “In accordance with the purchase-sale agreements signed on June 15, 2917, Halyk Bank announces purchasing 96.81% of Kazkommertsbank ordinary shares from Mr. K.Kh. Rakishev (86.09%) and from the Samruk-Kazyna National Welfare Fund (10.72%), respectively”.

Based on the Halyk Bank press announcement, the completion of the deal took place after the participants had fulfilled all the preliminary conditions, namely – finishing the comprehensive checks carried out by Halyk Bank and the National Bank of Kazakhstan, purchasing the Kazkommertsbank shares belonging to Nurzhan Subkhanberdin and the Central Asian Investment Company by Kenes Rakishev, repaying all the debt owed by BTA Bank to Kazkommertsbank, receiving the necessary approvals from the regulatory agencies in Kazakhstan and the other applicable jurisdictions, repaying the debt owed by Kazkomertsbank to the Samruk-Kazyna National Welfare Fund for BTA Bank shares in the amount of 41 bln tenge based on the 2014 agreement.

The press-release also stipulates that Halyk Bank will raise Kazkommertsbank capital by 185 bln tenge which will help to increase its own capital ratio to the level of the matching Kazakh banks.

Halyk Bank Chair Umut Shayakhmetova said that –

“The successful completion of purchasing one of the biggest financial institutions of the country with a wide branch network, a significant volume of client operations, and the presence in several foreign jurisdictions is the result of an effective team effort of Halyk Bank and its consultants. The scale of the deal can be seen from the fact that it has multiple participants including the state represented by the National Bank of Kazakhstan, Ministry of Finance, Samruk-Kazyna National Welfare Fund. At that, I would like to note that Halyk Bank had done an unprecedented job in organizing the comprehensive check of Kazkommertsbank which enabled us to successfully conclude the purchase”.

And now, when the deal of the decade is completed and all the required speeches have been made, let us reflect on what has happened. Based on the results of the purchase, it turns out that the market value of the second largest Kazakhstan’s financial institution whose assets, as of June 1, 2017, amounted to 4 trillion 546 bln tenge with 4 trillion 102 bln liabilities, whose loan portfolio amounted to 3 trillion 490 bln tenge, and whose own capital amounted to 444 bln tenge according to the NBK data equals 2 (TWO) tenge.

Among other things, it means that the quality of Kazkommertsbank financial reports was extremely low and, at a minimum, did not reflect the real situation or, at a maximum, was intently falsified. The National Bank of Kazakhstan could not elicit the critical situation in time or perhaps was hiding it thus assisting the falsification.

Therefore, questions arise to the National Bank of Kazakhstan and its head Daniyar Akishev. Sooner or later, these questions will be asked if not by Akorda than by the Kazakh and the international financial community, the press, foreign financial institutions, and rating agencies.

1. Why the results of the checks performed by a private buyer (Halyk Bank) turned out to be drastically different than those performed by the NBK’s?

2. Does this mean that the financial reports of the other Kazakh banks including that same Halyk Bank are just as doubtful? Considering they are operating in the same space and under the same conditions (both market and regulatory) as Kazkommertsbank?

3. Is the management of the NBK (the agency responsible for the the country’s financial market) prepared to explain the necessity of BTA Bank and Kazkommertsbank rescues, to name the total amount of the state money spent for these purposes, and to justify the validity of these expenditures?

4. Who, personally, among the NBK management was handling this matter and, therefore, will be held responsible for what happened?