Merger of Kazakhstan’s Two Largest Banks Would Be Credit Positive
Last Friday, Kazakhstan’s two largest banks, Halyk Savings Bank of Kazakhstan (Ba2/Ba3 negative, ba32 ) and Kazkommertsbank (B3/Caa2 review direction uncertain, ca) announced that they were in preliminary merger talks, but provided no further details. A merger would be credit positive for Kazkommertsbank’s creditors because the stronger Halyk would take over the weaker Kazkommertsbank, the country’s largest lender. Additionally, such a merger would eliminate overcapacity in the sector and provide additional business opportunities for remaining banks that are facing increased competition during an economic slowdown. Kazkommertsbank, which holds the bulk of the Kazakhstani banking sector’s problem assets, received liquidity support from the National Bank of Kazakhstan (NBK) following the scheduled repayments of its public debts and deposit outflows in late 2016. Shortly thereafter, NBK announced that it was in discussions with Kazkommertsbank’s shareholders to boost the bank’s capital adequacy.