20 May 2009


Anette Bohr

Annette Bohr

Associate Fellow, Russia and Eurasia Programme


  • During the economic boom, Kazakhstan's banks borrowed heavily on international markets to finance massive investments in construction and real estate. The international credit crisis has left the country's banks extremely exposed, in turn putting a large section of the economy under threat.
  • The crisis has been compounded by the machinations of certain political elite factions, which are alleged to have taken advantage of the crisis in order to advance private interests. In particular, the state has moved quickly to nationalize the largest bank, Bank Turan Alem (BTA), after it failed to raise its reserves to levels demanded by the government. This appears to be the latest attempt to strengthen the position of the political grouping centred around Timur Kulibaev, which controls Kazakhstan's second and third largest banks.
  • The government takeover of BTA triggered an early debt repayment clause which may lead to bankruptcy for the bank. This could lower Kazakhstan's sovereign credit rating, bring down the financial sector, and much of the country's economy with it.
  • Analysts believe that the crisis currently gripping Kazakhstan's banking sector is serving as an important test case scenario insofar as BTA's default could portend other corporate and bank defaults in the former Soviet Union over the next year.