In 1998 National bank of RK accepted decisions "About questions of transition of banks of the second level to the international standards" according to which 30 banks of the second level should reach the international standards till the end of 2000.
According to the Decree of the President of the Republic Kazakhstan, valid The law, "About banks and bank activity in Republic Kazakhstan" on National bank function of licensing of bank audit is assigned. The NBK develops the standard document on licensing of banking audit in which high requirements will be established and responsibility of bank auditors is defined.
In the beginning of 2000 year, 16 banks of a steel and participants of system of collective insurance of fixed deposits of physical persons. Active attraction of savings of the population in banks has led finally to growth of volumes of active operations spent by banks, increase of their competitiveness, decrease in the cost price of bank services and finally their availability to republic various strata of society.
At the start of 2001, there were 48 banks, down from 71 at the end of 1998 and from over 200 at the peak in 1993. The 11 banks included in the first group were required to reach international standards by 1998. An audit is being conducted to verify whether these 11 banks have complied with these obligations. In addition, 24 banks belonging to the second group were expected to accomplish the same transition by the end of 2000. Further consolidation is expected as many remaining banks will have been unable to comply with the increased minimum capital requirement of KZT 1 billion.
In 2002 the bank system continues to become stronger: high rates of increase characterize such indicators, as cumulative actives of banks, population contributions to banks. In the conditions of proceeding growth of resource base and increase in terms of involved resources for banks crediting of real sector of economy remains the most priority kind of operations. Positive economy for development the proceeding tendency of growth of a share and long-term credits in total amount of credits to economy is. High rates the insurance market that substantially to a measure was promoted by realization of the government program of development of insurance in Republic Kazakhstan for 2000-2002 also developed.[4]
In 2004 Kazakhstan the first of the states CIS has received investment ratings from the best rating agencies recognized as the world community. So, on May, 20th the international rating agency Standard and Poor's has raised a sovereign rating of Kazakhstan under bonds in foreign currency with «ВВ +» to "VVV-". In october, 27th the same year the international rating agency Fitch Ratings has raised a long-term rating in foreign currency of Republic Kazakhstan with «ВВ +» to "VVV-". The short-term rating in foreign currency has been raised with "In" to «F-3», and a long-term rating in national currency - with "VVV-" to «ВВВ». The forecast of long-term ratings – "Stable".
In June, 2006 the third of rating agencies Moody's Invertions Service most known in the world also has raised investment credit ratings of Kazakhstan. In the subsequent all three leading world rating agencies have appropriated to Kazakhstan ratings of an "investment" class. As a result the republic has passed from "speculative" in "an investment" class that has provided access to it and the companies of its residents to the international market of the finance on more favorable conditions. Increase of credit status of Kazakhstan is connected and with development of oil and gas sector of the country, the high prices for oil. Not last role has played and expected increase in extraction of hydrocarbons, and that the republic is included into the six of the first countries where the increase in oil recovery throughout the next 10 years will be observed. Non-residents’ share in authorized capital of Kazakhstan banks increased twice and came to 23% in year 2006-2007. In the same period share of assets controlled by non- residents in aggregate assets of banking system increased, coming to almost 18%.
Emerging markets showed a national economy was sustainable developed. The good situation developed in the internal financial market. The Kazakhstan bank sector from the moment of finding by independence republic develops as a whole is forward and it is progress. Banks initiated many positive processes in economy, growth of scale of business. At undeveloped stock market in the country national banks search for access ways to the capital world markets. At the expense of a gain of foreign loans and active operations growth of banks, their actives and credit portfolios was abroad accelerated. At the same time availability of cheap money was generated abroad by almost uncontrolled demand for them that was negatively reflected in debt dependence of the country. In 2007 the total external debt of Kazakhstan has made 96,4 bln US dollar. From a total sum of a total external debt 2,1 bln dollars are necessary on the debt state and guaranteed by the state, and 94,3 bln on unwarranted the state a Considerable financial resources from the foreign markets, involved with the most active Kazakhstan banks, have made as a result half of total external debt of the country. On the end of 2007 the total external debt of banks has made nearby 46 bln dollars. So the financial crisis had come. On the one hand the crisis raised attractiveness of financial sectors of countries with emerging markets (including Kazakhstan) which came to be considered by foreign investors as “safe heavens” for some time. On the other hand, in the matter of crisis large transnational banks had to direct resources for saving their own financial stability. This led to limitation of their resources for international operations in the new countries and investment in development of international branches.
A new wave of the world financial crisis, which had begun in the third quarter of the year 2008, quickly turned “safe heavens” from the developing markets. The climate for banking business in these countries got worse dramatically. At the same timelocal bank valuation decreased manifold thereby it became easy for the global strategic investors to enter the domestic markets and come to the fore there. Under the assumption what local markets’ medium-term prospects are positive the latter term is even able to raise investment attractiveness of local banks. The exhaustion of liquidity and burdensome debts to the foreign countries had shaken stability and credit status of the Kazakhstan bank system. In November, 2008 the state has allocated $21 billion for support bank. They had been intended to provide liquidity of bank system, to buy bank actives suffering disaster, to provide with credits the withering building industry, to support agriculture, and also the enterprises of small and average business.
In the beginning of February, 2009 the government had bought a share at a rate of 78 % from BTA bank, the largest establishment on delivery of credits, and also that Samruk-Kazyna had bought 76 % shares of Alliance bank, 4th bank on size.The basic achievement of bank system on the results of 2009 consists in essential reduction of an external debt. [5]
CHAPTER 2. ANALYSIS OF FOREIGN BANK IN THE FINANCIAL MARKET OF KAZAKHSTAN ( on example of ATF bank)
Foreign banks expansionon Kazakhstan market was one of the most discussed themes in period before August 2008 which regards the development of domestic financial sector.
Banks that are partly or wholly owned by foreign capital. Activities of foreign banks in the country are regulated by national legislation, which establishes a special regime for foreign banks to limit or enhance them, depending on the state of the economy and the direction of government policy.
One may separate out three stages in the history of foreign direct investment to Kazakhstan banking sector for the last five-six years:
· before the middle of year 2006 – weak increase stimulated by general positive estimate of Kazakhstan economy and financial sector’s prospects;
· from the end of year 2006 to the middle of year 2007 – rapid growth acceleration, abrupt change to brand new level. This stage was stimulated by Kazakhstan stock market expansion which had lead to substantial reevaluation of Kazakhstan banks’ assets;
· from the middle of the year 2007 to the end of the year 2008 – foreign direct investment increase deceleration, conditioned by influence of the world financial crisis.
Though in the end of the third quarter of 2008 an increase of foreign direct investment to Kazakhstan banking sector had been continuing, however, it was undoubtedly under its own inertia and was caused by conclusion of previous deals.
Influence of the world financial crisis one may expect that new forth stage in the history of foreign investment to the Kazakhstan banking sector started from the beginning of the year 2009. It is characterized by multiple contraction of amount of investments, active re-allocation and consolidation of Kazakhstan banks’ shares between narrow group of global banking groups, growing role of profit capitalization in the own capital building sources of non-residents’ subsidiary companies.
Banks that controlled by foreign owned banks were among the first to develop such sectors of our financial market, as the issuance of housing loans, automobiles, consumer durables, other consumer loans. Foreign banks have successfully lend to small and medium businesses, not to mention their active role in the financial services to corporate clients.[5]
ATF bank is one of the banks with foreign participation in the financial market of Kazakhstan. It appears in 1995 as CJSC “Almaty trade-financing bank” and conduct operations in tenge and foreign exchange. In 1996 starts servicing of payment Visa, EuroCard or MasterCard, Diners Club, JCB, American Express payment cards. National bank of Kazakhstan included “Almaty trade-financing bank” into first group of banks acting accordingly to international standards in 1997. In September 1999 started to express money transfers by order of individuals without opening of bank accounts in 170 countries of the world in cooperation with Western Union. In October 2000 issued first coupon bonds in amount 5,000,000. Change in the name of “Almaty trade-financing bank” to “ATF bank” was done in 2002. Also in this year was signed memorandum of cooperation with Atyrau, Aktubinsk, Mangistau and western Kazakhstan regions. 2002 was successful year for bank, because they increased their capital by 31%, also they became shareholders of “ National saving bank of Kazakhstan” and started to issue VISA Virtuon cards. In 2003 the ATF bank enter in cooperation with the Kazakhstan Franchising Association, that was the first in Kazakhstan that started to realize the financing program for acquisition of wide-known world companies’ brands by local entrepreneurs.Since December 11, 2003 “ATF Bank” has implemented a new service for Visa Gold, Visa Business, Visa Classic, Visa Electron card holders. The new service allows receiving information on card account balance via ATM during staying abroad.In 2004“ATF Bank” declares about implementation of a new service – “Partner” program conducted in cooperation with “ATF – POLIS” insurance company and “OTAN” Pension Fund. “Partner” program is dedicated for service quality increase of clients. In few month later they became one of the main shareholders of “Otan” “Open Pension Savings Fund”. In accordance with the law “On credit bureaus and preparation of credit histories” the first credit bureau was created in Kazakhstan. ”ATF Bank” JSC was one of the founders of “First Credit Bureau” LLP. Management of ”ATF Bank” JSC presented new approach to business conduction and introduced new brand style of the leading financial institute of the country: “ATF Bank” is the Bank for steady growth!”. 2005-2006 years were years of getting awards:
1. Leading world financial edition “EUROMONEY” admitted “ATF Bank” a leading financial institute of the Republic of Kazakhstan in corporate management and the best bank for SME in Kazakhstan.
2. The National League of consumers in Kazakhstan by results of its activities in 2005 awarded “ATF Bank” – a member of the Association of Perfect Business in Kazakhstan, with "Immaculate" People’s Quality Mark and Certificate "For assistance in SME development in Kazakhstan".
3. “Euromoney” leading world financial edition conferred “ATF Bank” on the award “The best bank in corporate management among developing countries of Europe".
On June 2007 bank Austria-Creditanstalt AG , who was sub-division of UniCreditGroup for commercial and bank operations in Central and Eastern Europe and private shareholders of ”ATF Bank” JSC signed the agreement on acquisition of majority stake of ”ATF Bank” JSC. It was the beginning of the new way of development of ATF bank on the territory of Kazakhstan and on the territory of other countries. [6]
Analysis of financial situation of ATF bank shows steps of development and change in it’s assets, liabilities and capital. It is the most important part for any commercial bank, so here we will see changes in horizontal and vertical analysis of balance sheet for 2007, 2008 and 2009 years. Analysis of structure of assets shows increase or decrease in the development or regress in it’s activity.
Table 1- Assets of ATF bank, million tenge, [7]
| 2009 | 2008 | 2007 | Rate of increase2009 | Rate of increase 2008 | |
| Cash and cash equivalents | 187 766 665 | 95 590 527 | 57 759 513 | 96,42811 | 65,49746 |
| Obligatory reserves | 18 036 119 | 21 654 652 | 60 880 209 | (16,7102) | (64,4307) |
| Amounts due from credit institutions | 3 130 290 | 13 556 199 | 4 994 258 | (76,9088) | 171,4357 |
| Loans to customer | 778 889 753 | 799 054 021 | 783 253 258 | (2,52352) | 2,017325 |
| Current income tax assets | - | 3 580 027 | 1 063 011 | - | 236,7817 |
| Deferred income tax assets | 8 308 728 | 213 635 | - | 3789,217 | - |
| Property and equipment | 25 564 877 | 25 321 368 | 25 089 322 | 0,961674 | 0,92488 |
| Other assets | 9 466 360 | 11 363 223 | 4 968 772 | (16,693) | 128,6928 |
| Total assets | 1 031162792 | 970 333 652 | 938 008343 | 6,268889 | 3,446164 |
Source: Financial report of ATF bank 2007,2008, 2009
We can see increasing in the amount of total assets by 3,4% in 2008 and increase by 6,26% in 2009. It means that crediting, investments and other operations with money increased. Increase in cash and cash equivalents in 2008 was by 65%, past only 1 year after enter to UniCreditGroup, and we can see high results. In 2009 this number increased by 96%, so we can conclude, that economic policy of ATF bank in period of financial crisis is right and will bring better results in 2010. Loans to customer in 2009 decreased by 2,52% despite to decrease in interest rate for bank’s loans. But there was increase in property and equipment that bank purchased by 0,92% in 2008, and by 0,96% in 2009. Decrease in amounts due from credit institutions decreased by 77%, that means that amount of money in credit portfolio of ATF bank is enough to their operational work. Also we can see changes in other assets of ATF bank. If in 2008 there was increase in this point by 128%, in 2009 we see decrease in this item by 16%.
In structure of assets the biggest relative density is in loans to customers. It means that availability of credits was very high and interest for this loans were payable for Kazakhstan’s citizens. The second place in relative density takes cash and cash equivalents. It was a favorable result for ATF bank, because profit increased, so the main goal of any bank was achieved.
Table 2 – Liabilities of ATF bank, million tenge, [7]
| 2009 | 2008 | 2007 | Rate of increase 2009 | Rate of increase 2008 | |
| Financial instruments at fair value through profit or loss | - | 332 190 | - | - | - |
| Deposits and balances from banks | 33 960324 | 168 206 178 | 296 755 417 | (79,81) | (42,7394) |
| Current accounts and deposits from customers | 501 639782 | 343 421 095 | 380 605 239 | 46,0713 | (9,76974) |
| Debt securities issued | - | 204 988009 | 174987265 | - | 17,14453 |
| Current tax liabilities | 732,251 | - | 595 759 | - | - |
| Other liabilities | 2,966,250 | 2 018 771 | 2 292 648 | 46,9335 | (11,9459) |
| Total liabilities | 991,040,481 | 718667272 | 852236328 | 7,29 | (15,6728) |
Source: Source: Financial report of ATF bank 2007,2008, 2009