On November 2, 2020, Jýsan Bank and ATFBank announced that the former intends to purchase 99,76% of the latter’s shares. The reasons why Galimzhan Esenov has decided to sell the bank are clear-cut. But why is Jýsan Bank buying it?
First, let us quote the announcement titled «Jýsan Bank and ATFBank’s Shareholder Have Reached a Preliminary Agreement on the ATFBank Purchase» (text in bold by KZ.expert).
«As part of the signed agreement, in November 2020, the parties intend to conclude the contract on ATFBank’s shares sale and purchase. After the sale and purchase contract is signed and approved by the Agency for Regulation and Development of Financial Market of the Republic of Kazakhstan, ATFBank’s actual shareholder will buy Jýsan Bank’s shares as part of Jýsan Bank’s additional stock issue.
It is understood that, after the sale and purchase agreement is signed, both banks will be operating together within the frame of a single strategy».
«Jýsan Bank is a subsidiary of the First Heartland Securities investment company. Apart from a wide range of the traditional banking services, Jýsan Bank is developing its own ecosystem that incorporates the products and the services of the companies belonging to the Jýsan financial group: the brokerage services of Jýsan Invest and the insurance services of Jýsan Garant.
ATFBank ranks among Kazakhstan’s major banks. In the course of its 25-year history, ATFBank has developed a universal profile by providing a full range of the banking services for the Private Banking clients and for the corporate sector around the entire country».
The reasons why ATFBank’s key shareholder Galimzhan Esenov has chosen to sell the bank lie on the surface — after several tenge devaluations, the collapse of the resource-oriented model of the national economy and the decline of the local business’ competitive viability that has been under its way for the past several years, the banking business in Kazakhstan has stopped being profitable. Moreover, it has turned into a constant headache for its owners.
Why has Jýsan Bank become ATFBank’s buyer? It is also quite obvious.
Heartland Archipelago and Tsesnabank
The thing is that this financial institute that was once called Tsesnabank is, de-facto, controlled by the family of Nursultan Nazarbayev, the First President of the Republic of Kazakhstan and the «Leader of the Nation». In his turn, Galimzhan Esenov is related to Akhmetzhan Esimov (he is the latter’s son-in-law) who holds the position of the Chairman of the Management Board of the Samruk-Kazyna NWF. Esimov is also Nursultan Nazarbayev’s nephew and one of the latter’s most trusted persons. Therefore, the future transaction can be easily called a family deal.
The mechanics of the deal described in the announcement allow us to draw several conclusions.
Firstly, ATFBank’s financial standing is tolerable (if not normal). Otherwise, the National Bank of the Republic of Kazakhstan and the Agency for Regulation and Development of Financial Market would have «saved» ATFBank beforehand (the way they had done it earlier with Tsesnabank). By the way, you can find a more detailed description of the Tsesnabank case in our publications –
BTSK: Passions Are Rising (text available in Russian),
On Bakhytbek Baiseitov’s Big Problems,
Tsesnabank’s Hidden Agenda. Part I,
Tsesnabank’s Hidden Agenda. Part II.
Secondly, Nursultan Nazarbayev who, undoubtedly, has approved both the sale of ATFBank and its purchase by Jýsan Bank is still quite fond of Akhmetzhan Esimov. Otherwise, instead of Jýsan Bank’s shares, Galimzhan Esenov would have received one tenge as his pay for 99,76% of ATFBank’s shares. The history of the Kazakh banking sector knows enough such precedents of which the most notorious one was BTA Bank’s 2009 «nationalisation» that is still echoed around the world with sadness.
Thirdly, the worsening of the economic conditions (both external and internal ones) forces Kazakhstan’s big business (private and state-owned) to survive via the standard capitalistic methods. In this case, by consolidating and getting bigger.
But this means that, if the principal political changes (a revolution or a coup, for instance) do happen and if they do bring the new forces to power, the task of depriving the previous ruling clan, (in other words, the Nazarbayev clan) of its property, capitals and other assets is going to be much easier to accomplish.
Technically, the sale of ATFBank changes nothing. After several month of operating as a subsidiary, it is likely to merge with Jýsan Bank. And Kazakhstan will lose one more of its financial institutes. But the market is unlikely to notice that. Unless ATFBank’s clients will have to decide whether they want to stay with Jýsan Bank or look for something different.