Image and Realities
Edited By Aydar Amrebaev, Hans-Georg Heinrich, Ludmilla Lobova and Valikhan Tuleshov
Stephan Barisitz, The Kazakhstani BankingSystem: Highly Leveraged Boom, Painful Bust,Costly Recovery
171 Stephan Barisitz107, The Kazakhstani Banking System: Highly Leveraged Boom, Painful Bust, Costly Recovery Abstract Pushed by expanding income (on the back of rising oil prices) and by rapid external debt accumulation, the Kazakhstani banking sector fea- tured one of the most dynamic credit booms in CESEE until 2007. Fol- lowing the US sub-prime crisis, banks’ access to external funding plum- meted and credit expansion ground to zero. The global economic crisis that broke out in late 2008 forced credit institutions to drive down their external indebtedness. Moreover, the (temporary) collapse of the oil price and the devaluation of the tenge cut domestic demand, liquidity and solvency. The share of non-performing loans (NPLs) skyrocketed from 5% at end-2008 to 21% a year later, and further to 26% in mid-2011. Large losses stemming from real estate exposure (burst of housing bub- ble), related-party lending, and fraud, likely played a role. Loan-loss pro- visions were sharply ramped up, profitability was all but wiped out in 2008 and hefty losses incurred in 2009 (ROA end-2009: -24%), when sector capital even turned negative. The authorities’ crisis-response measures included the nationalization of two of the four largest banks and the recapitalization (via the acquisition of minority stakes) of the two others in early 2009 (all four banks together accounting for two thirds of sector assets). The two nationalized banks then defaulted on their high foreign liabilities and initiated debt-restructuring negotiations that pro- duced steep haircuts (53% resp. 76%) for creditors in 2010. The sector’s debt...
You are not authenticated to view the full text of this chapter or article.
This site requires a subscription or purchase to access the full text of books or journals.
Do you have any questions? Contact us.Or login to access all content.