Acquisition Of Banks In Kazakhstan

The acquisition of a Bank in Kazakhstan is an attractive investment prospect due to Kazakhstan's developing economy coupled with the great potential of the financial market. In view of the fact that many Kazakhstani banks have many clients and significant experience in the market, together with substantial assets, the acquisition of a bank in Kazakhstan, with a rational development plan, can become a worthy addition to a buyer's asset portfolio.

When purchasing a Kazakhstani bank it is necessary to remember that there is a range of certain restrictions provided by Kazakhstani legislation in relation to the bank's shareholders, the bank's participation in other companies, banking confidentiality etc.

1. Disclosure Of Information About Borrowers.

   One of the examples of such a restriction is that the principle of consolidated supervision adopted by many European and US banks under the Basel Committee's recommendations contradicts local Kazakhstani rules about banking confidentiality.

   In other words, consolidated supervision requires all the subsidiaries or affiliated bodies of a parent company to furnish information about all their loans, which are subject to banking confidentiality.

   Kazakhstani law defines confidential banking information as information concerning the existence, owners and numbers of accounts of depositors, clients and correspondents of the bank, concerning balances and movements of monetary resources in those accounts and accounts of the bank itself, concerning the bank's transactions (except for the General Terms for Conducting Banking Transactions), as well as information concerning the existence, owners, nature and value of clients' assets which are kept in safety deposit boxes, cases or on the premises of the bank.

   The general rule of Kazakhstani law is that Kazakhstani banks shall guarantee confidentiality in respect of the transactions and deposits of their depositors, clients and correspondents, as well as confidentiality concerning assets which are located in the safe boxes, cases or on the premises of the banks.

   Thus, we can see that the principle of consolidated financial supervision covers banking confidentiality issues. As a consequence, it leads to limited access for potential investors to information considered as confidential banking information under Kazakhstani law.

2. Disclosure Requirements (Governmental Approvals)

   In Kazakhstan, there are two types of the most important approvals - the Financial Market...