[Kazakhstan’s Banking Sector] #5 Halyk Bank

Halyk Bank, which is controlled by President Nursultan Nazarbayev’s daughter and son-in-law, is Kazakhstan’s third largest lender. It focuses on retail services and SME lending, and had total assets of approximately $13 billion at the end of 2008. In 2006 it raised $750 million through a London IPO.

Since the beginning of 2009, Halyk has been actively shoring up its financial position. In February it received 120 billion tenge ($982 million) as part of the Kazakh government’s bank bailout program. Later in the month it launched a $223 million share issue to existing shareholders consisting of new, diluted shares in order to boost its capital. National Wellbeing Samruk-Kazyna, the sovereign wealth fund, purchased 20.9% of Halyk’s common shares at the end of March. Then, in April, the bank launched another issue - this time of preferred shares - raising raise $643 million to boost lending.

By June it had become the best capitalized bank in Kazakhstan - and the markets have taken notice. Halyk’s share price has more than doubled since it bottomed out in March, and it is far and away the best performing of its London-listed peers this year.

That said, Halyk is not quite out of the woods. It has debt (though less than others) that it still needs to restructure, and the government has said that it’s not prepared to help with this at present. In June, as with Kazkommertsbank, Standard & Poor’s expressed concerns over the bank’s asset quality and liquidity and lowered its long-term counterparty credit rating to ‘B+’ from ‘BB-’. A downgrade, yes, but still a far cry from the default ratings Alliance Bank and BTA Bank received from S&P at the same time.

So all things considered, Halyk has weathered the storm relatively well. No doubt its strong connection to President Nazarbayev has helped, but its ability to raise funds bodes well for the future. And with Kazakhstan’s financial sector struggling to piece itself back together, it is well positioned to capitalize on its new reputation as one of the most stable of the country’s banks.

Possibly related posts:

1. [Kazakhstan’s Banking Sector] #4 Kazkommertsbank
2. [Kazakhstan’s Banking Sector] #1 Alliance Bank
3. [Kazakhstan’s Banking Sector] #2 BTA Bank
4. [Kazakhstan’s Banking Sector] #3 Astana Finance
5. Down But Not Out - Ukraine’s Banking Sector is Putting Up a Fight