Nazarbayev: Weak banks should be united

By Azernews

By Kamila Aliyeva

Kazakh President Nursultan Nazarbayev believes that weak banks that do not benefit the country's economy should be merged.

“The banking sector is weak,” Nazarbayev said at the enlarged session of the Government adding that “only four banks hold 80 percent of the assets of the banks.”

He also noted that during the crisis, many large companies took the mergers and acquisitions road, RIA Novosti reported.

“The banks should be merged or shareholders should bring their own money in capital if they want to save the bank,” Nazarbayev said adding that if economy doesn’t need them, they do not have the right to life while addressing the head of the National Bank Daniyar Akishev.

Kazakhstan has a two-tiered banking system. The first tier represents the National Bank of Kazakhstan (NBK), which reports to the president. The second tier includes 38 commercial banks, including one state-owned bank and 16 banks in which foreigners hold 30 percent or more of the bank’s shares.  

A number of foreign stockholders entered the banking market from 2008-2012, including Russia's Sberbank, Israel's Bank Hapoalim, South Korea's Kookmin Bank, the Arab investment company Alnair Capital, Russia's VTB, and Islamic Al-Hilal bank from the United Arab Emirates.

The National Bank acquired the functions of a financial regulator after merging with the Financial Supervision Agency in April 2011, and is therefore charged with overall supervision of the banking sector.

The primary objective of the National Bank is to ensure price stability in the economy. To achieve this goal, the National Bank conducts monetary policy within the inflation targeting framework. The shift to an inflation targeting regime was announced on August 20, 2015.

In 2016-2017, the National Bank’s target is to achieve the annual inflation rate within a band of 6-8 percent. In the medium term, the National Bank aims at achieving the annual inflation rate of 3-4 percent in 2020.

According to statistical data, the inflation rate was 7.9 percent since January 2016 till January 2017. Food prices have increased by 9 percent, non-food items’ prices have gone up by 9.2 percent, and paid services’ prices have been raised by 5.3 percent in January 2017, compared to January 2016.