The Marker of Tokayev’s Capabilities

On January 15, 2021, speaking at the opening of the first session of the newly elected Mazhilis, President Kossym-Jomart Tokayev announced that the country is to undergo reforms this year. Should one believe his promises?

Here is a quote from Akorda’s press-release (text in bold by 

«In the year marking the 30th anniversary of our Independence, the country will undergo comprehensive reforms. We must concentrate our efforts on building an efficient state and a fair society. The improvement of the quality of life and the increase of the welfare of our citizens are our main priorities. Our people expect the social and economic programs to produce a fully effective and concrete result, said he».

In our opinion, everything that Tokayev had declared and promised (and not just on January 15 but before) as well as everything he is to promise in the future will be implemented mostly in name. At best — on paper that will accept whatever one writes on it.

We think so not only because Kossym-Jomart Tokayev as a person and a politician is weak and of second importance in comparison with his predecessor. Even if we are mistaken, and Tokayev turns out to be an honest, sincere, powerful and independent statesman, he and his allies will have to repeat the labours of Heracles. For instance, clear the country off Nursultan Nazarbayev’s clan and the sewage it’s produced, fight off the corruption hydra, inspire the nationwide readiness to do a hard and honest work and so on and so forth.

To assess Tokayev’s administration’s real capabilities, we will use the case of two small financial institutes (small — in comparison with the Halyk Bank of Kazakhstan), namely, Capital Bank Kazakhstan JSC and AsiaCredit Bank JSC. 

We have already addressed the reasons for their abnormal resilience in our articles a number of times. Our latest material on the subject was published on December 14, 2020, and titled «What’s Keeping „Phantom“ Banks Afloat?». Now then, during the past month, the situation with these «bloating» banks hasn’t changed; they are still kept afloat even though, in the past, the National Bank of Kazakhstan had no problem revoking the licences of the structures that were much bigger and more sustainable than these banks. Given the Kazakh realia, this kind of passivity on the part of the regulator can mean one thing only — the absence of political will on the top of the political pyramid. 

We do not know whether the National Bank chaired by Erbolat Dosayev and the Agency for Regulation and Development of Financial Market chaired by Madina Abylkasymova have ever suggested to Akorda and the Library to solve these problems and, if they have, we do not know how they planned to realise the idea. However, we may assume that they haven’t even dared to raise this question in the hope that the problem will melt away by itself.

Unfortunately, at this point, we have no reliable information on what’s happening with Capital Bank Kazakhstan JSC and AsiaCredit Bank JSC. There is nothing in the Kazakh press and social networks, either. The Centre of Business Information «Capital» is the only exception. In one of its publications titled «What’s Going to Happen to AsiaCredit Bank and Capital Bank Kazakhstan?», they cite the answer of the Agency for Regulation and Development of Financial Market given in response to the media outlet’s inquiry (quoting): 

«Responding to’ inquiry, the Agency for Regulation and Development of Financial Market has confirmed that, on December 25, 2020, the time limit allotted to the shareholder for implementing the action plan was already exceeded. With that, several action items are still in the implementation phase, therefore, as the regulator has informed us, an additional time will be required for their completion.

«Currently, the agency is analysing the efficiency of the shareholder’s actions. The decisions regarding the further enforcement of compliance measures in the banks will be made in the nearest future with account taken of this assessment«, explains the ARDFM. However, the representatives of the agency did not specify the decision lead-time». 

So, it looks like the Agency for Regulation and Development of Financial Market is going to be analysing the efficiency of the operations in progress until the situation sorts itself out. 

Why do we think so? Because all the actors of this story have found themselves in a deadlock. Orifdzhan Shadiyev, the nominal shareholder of Capital Bank Kazakhstan JSC and AsiaCredit Bank JSC, cannot attempt anything without the approval of his silent partner and the real owner of the two banks Nurbol Nazarbayev, Bolat Nazarbayev’s son and Nursultan Nazarbayev’s nephew.

In his turn, Nurbol Nazarbayev does not want to (or cannot) increase the banks’ capital in the amount required by the regulator. At the same time, he cannot leave the banks and Orifdzhan Shadiyev to their fate since many of his projects have been financed through these institutes and he does not want the information on these operations as well as on the laundering of the monetary resources and on moving them our of the country become public. Which will be practically unavoidably if the bankruptcy proceedings are launched.

Finally, perhaps the state personified by Nursultan Nazarbayev and some of his allies would be able to find a hundred of billions tenge to save the banks but it cannot do so due to the political reasons. Given the circumstances, Capital Bank Kazakhstan JSC and AsiaCredit Bank JSC are doomed to continue existing and only Akorda’s political decision may interrupt this painful process. And there is only one person who can make this decision, President of the Republic of Kazakhstan Kossym-Jomart Tokayev.

Perhaps he thinks that this is a small problem and not worthy of his attention but, on the other hand, the solving of this problem seems to be more than the heads of the National Bank and the Agency for Regulation and Development of Financial Market can manage. Therefore, we believe that the time has come for the head of the state to assume the responsibility. And if he won’t be able to solve such a small individual task, how can one expect him to implement comprehensive reforms?


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