Banking Opportunities in Kazakhstan 2008

By Joseph C. Carter III (L) and Mukhtar S. Nurzhigitov (R)
McGuire Woods

Kazakhstan's commercial banking sector has grown dramatically in recent years. While the sector, like that in many other countries, is under great pressure, the result of the credit and liquidity crises that arose last year, the longer term prospects of Kazakhstan's banks remain bright. Strengthening their cause is Kazakhstan's positive fundamental economic outlook associated with its vast oil, gas and mineral resources. Despite shirt-term issues connected to the crises,

Kazakhstan's banking sector presents an attractive investment opportunity for foreign banks.

Kazakhstan's Banking Sector Kazakhstan's banking sector has two tiers. The National Bank of Kazakhstan (NBK) is the central bank and represents the first tier of the sector. The NBK develops and pursues the State's monetary and credit policy, issues the national currency (the tenge), maintains the country's foreign currency and gold reserves and carries out foreign exchange control and regulation. The NBK has delegated to the Agency for Regulation and Supervision of Financial Markets and Institutions (FMSA) the general authority to oversee and supervise the second tier banks. The FMSA supervises and regulates, among other things, the chartering of banks, the acquisition of banks or significant interests in banks, minimum reserve and capital adequacy requirements and the level of external borrowings that may be made by banks. Kazakhstan is generally considered to have the strongest bank regulatory regime in the countries of the former Soviet Union.