The situation in Kazakhstan’s banking sector is close to critical, if not exactly critical yet. Thus, it is not surprising that Nazarbaev has been making a lot of critical remarks on the subject recently. Judging from his address to the people of Kazakhstan and his responses at the cabinet meeting, we should expect a decrease in the number of banks, not only due to mergers, but also due to bankruptcies and liquidations.

Due to this, it is interesting to see the reaction of Kazakh citizens, or to be more precise, the part of the population that has bank accounts. Such reaction can be examined through deposit dynamic of physical entities in the last year. For these purposes, we have created a table, but in order not to overload it, we have left out statistics on small institutions in the industry such as subsidiary entities of foreign banks not interested in offering their services on the retail market.

It is clear from the table that private individuals, i.e. depositors of Kazakh banks, do monitor the financial sector, are aware of the problems that are happening there and are quick to react to them. Thus, among the banks that in 2016 had an absolute downturn in the volume of deposits, are such problematic banks as “Kazcom” and “Delta Bank”. Also, among them is “Bank CentreCredit” that had the lowest growth in total deposits at mere 0.9%.

It is clear, that if it were not for deposit insurance, the level of cross flow of private monetary funds between financial institutions would be even more significant. In addition, considering high reliance of second-level banks on deposits including those from private individuals, this means an increase in risks. Up until the present moment, those risks could be alleviated by the National Bank, in part by offering liquidity provision and by employing administrative resources.

However, we have a merger of the “National Bank of Kazakhstan” with”Kazkom” and the merger of “Tsesnabank” with “Bank CentreCredit” ahead of us, plus a possible bankruptcy of a few financial institutions. All of those, of course will cause uncertainty in the market.