Yuliya Polozhentseva, Cfa

 Small steps or a big jump: the M&A dilemma at ForteBank, Kazakhstan Yelena Krupina, Yuliya Polozhentseva, Aditee Prabhakar Narxoz University “The Kazakhstan President has instructed National Welfare Fund “Samruk Kazyna” to sell three large banks which were nationalized during the 2008 financial crisis. So, BTA Bank and two other banks Alliance Bank and TemirBank, will be on sale soon. I also heard that the Government will soon approve the new financial sector development concept focusing on banking sector enlargement. Most likely half of the current 38 banks will not be able to meet new requirements and will be closed down. If the new concept is approved, ForteBank will have a problem too. We are in 28th position out of the 38 banks in terms of size. We do not have enough assets and it will be impossible to grow organically in such a short period of time especially in our target B2B focus group.” Mr Bulat Utemuratov, main shareholder of ForteBank. These words were said by Mr Bulat Utemuratov, the main shareholder of ForteBank, to Guram Andronikashvili, the CEO of ForteBank, on October 9, 2013. ForteBank was a relatively small bank in Kazakhstan, ranked 28th based on its total assets out of the 38 banks registered in Kazakhstan. The banks on sale were much larger than ForteBank: BTA was ranked #3, Alliance Bank - #9 and TemirBank - #13 (see Exhibit 1 and Exhibit 2). Bulat, who always wanted to take an active part in the Kazakhstani banking sector development, thought that this could be an opportunity to expand ForteBank’s activities and thus survive in the competitive market. However, Guram was not sure whether the acquisition of the almost bankrupted banks with huge debts and non-performing loans was the right choice. Even though Bulat was interested in the acquisition of Alliance Bank and TemirBank, Guram was unsure about the purchase, the merger arrangement, the legal scenario etc. He could smell the opportunity, but he needed to bring all the information together, talk to his board and then make a quick decision whether to pull the trigger or not. Clearly, the management was facing a paradox – should they continue to operate small and face the threat of closure as per the anticipated government decrees, or get into high-risk and uncertain acquisitions of large underperforming banks. Time was running out and the management needed to decide fast! ForteBank background and key developments ForteBank was created in 2012 as a result of the re-branding of Metrocom Bank, which got its license in November 2007 and officially started operations in March 2008. The bank opened several branches in all the major cities of the Republic of Kazakhstan. In 2009, after the Financial Control Agency of the Republic of Kazakhstan raised minimum capital requirements to USD 33.5 million (KZT 5 billion), the bank was at risk of not meeting the minimum standards and started to look for new strategic investors. Later in 2010, a controlling stake of 80,86% was purchased by Bulat Utemuratov, one of the most prominent entrepreneurs in Kazakhstan. He also owned Verny Investments Holding with assets in mining, banking, real estate and education. Importantly Bulat was among those who started the banking sector in Kazakhstan and actively participated in its development. In June 1995, he founded the Almaty Commercial and Financial Bank, which was later renamed as ATF Bank. In the early 1990’s the banking sector was booming in the country. It was a time when many saw opportunities to earn money from the sector but did not have enough knowledge of how a bank functioned. During the period from 1995 to 2007, Almaty Commercial and Financial Bank had grown from a small financial institution into a large multi-regional and multi-product financial group with more than 150 branches and about USD 8.5 – 9.0 billion on its balance sheet. In November 2007, ATF Bank was successfully sold to the Italian group UniCredit. After the purchase of Metrocom Bank in 2010, Bulat formed a new management team. Timur Isatayev, a former CEO of ATF bank before the sale, was appointed as the chairman of Board of Directors and Guram Andronikashvili was appointed as the CEO of the bank. The new team revised the bank’s operations and approved a new strategy for further development of the bank as a niche player working with small and medium enterprises and corporate clients. Previously, the banking sector was represented by similar banks with standard services for all sorts of customers, be that individuals or legal entities. None of them offered any unique products or premium services, which became key factors in the new Metrocom Bank’s philosophy. The bank re-designed all its offices. A new futuristic interior design was developed by an Italian agency which in many ways distinguished this bank from its competitors. All the offices were equipped with new IT-equipment and software – another innovative move taken by the bank. The bank positioned itself as a young and modern financial institution in Kazakhstan (see Exhibit 2 and Exhibit 4). In 2010 the new team also decided to rename the bank as ForteBank, which perfectly reflected the new mission and values along with its ideals. The term “Forte” was borrowed from Slavic, Anglo-Saxon and Latin roots. Translated from Slavic “forte” meant “built for centuries”, in Latin “fast” or “loud” and in Anglo-Saxon it meant “strength” or “superiority”. The bank was officially registered with its new name in May 2012. Kazakhstan and banking system evolution The Republic of Kazakhstan was the 9th largest country in the world and got its independence after the collapse of the Soviet Union in 1991 (see Exhibit 3). It was among the countries with the lowest population density with a surface area of 2,724,900 square km and a population of 17.04 million (based on the 2013 census), 40% of the population lived in a rural setting and in a large number of small settlements. Kazakhstan generated 60% of the GDP of Post-Soviet Central Asia1 and had a GDP of $179 332 billion with an annual growth rate of 4.5%; per capita, Kazakhstan's GDP stood at $9686. The country was rich in oil, gas and minerals which accounted for the majority of the country’s earning from exports of these raw materials and contributed to 75% of its GDP2. Even though Kazakhstan had established itself as a newly industrialized country as well as an emerging economy, the production sector was still under development. The banking system was, however, one of the strongest amongst the countries of the former Soviet Union, even though it’s development and improvement had been long, and slow and continued even up until today. According to the official literature, the Kazakhstani Banking system development process could be broadly divided into three stages3: Stage 1 (1988 – 1990) was also known as the phase of initial emergence of a two-tier banking system: central and commercial banks. Prior to 1988 and since 1930, Kazakhstan was part of the Soviet Union and had a one-tier banking system. During the Soviet times, the banking system was represented only by the State Bank, Construction Bank (Stroy Bank), External Sale bank (Vneshtorg Bank) and Savings bank, and all of them were owned by the state. The two-tier banking system was comprised of the Central Banking Authority, together with a number of private banks, insurance companies and pension funds. Commercial banks were officially allowed after several decrees were issued in 1987 and 1988. Stage 2 (1991 – 1993) was a result of a major change of the governing system. After the collapse of the Soviet Union in 1991, the newly independent republics of Central Asia inherited the basic components of the Soviet banking system. In-, the banking system of the independent Republic of Kazakhstan was weakly controlled by the State Bank and the state had no clear idea how to manage it without assistance of the main Republic – the Russian Federation. A lot of new commercial banks were opened at that time as the license and capital requirements were very low. This resulted in an increase in the number of banks in the country from 72 in the year 1991 to almost 200 in the year 1992, however the quality of service and trust was low. Every bank saw the opportunity to make money, but they did not have enough knowledge or a clear idea of how to manage the operations in a systematic way. Stage 3 (1994 – 2005) was characterized by the improvement of the banking system. Several laws for the National Bank and banking system were adopted which determined the further direction of development of the banking system in Kazakhstan. The National Bank of the Republic of Kazakhstan reviewed and tightened the requirements for opening a new bank. Kazakhstan also switched to the International Financial Reporting System (IAS) in 2003 and adapted the Basel II capital adequacy criteria in 2005. Before the global financial crisis (as of January 1, 2007), the number of actively developing second-tier banks was reduced to 33. The larger context - Global financial crisis affect on Kazakhstan The global financial crisis revealed significant shortcomings both in the state regulation of the banking system and the running models of managing commercial banks in Kazakhstan. The period (2006 – 2013) can be referred to as the fourth stage of banking system development in the country. Since the summer of 2007, the American mortgage crisis had a significant impact on the Kazakhstani real estate market, henceforth on the banking sector as well in 2008. The banking sector faced serious difficulties due to the policy of mass lending to the real estate sector. They did this by borrowing cheaply from the international financial markets, due to a high Standard & Poor’s credit rating of BBB+, supported by stable economy growth based on natural resources and high oil prices4. Many large banks issued Eurobonds directly at the London Stock Exchange. Relying on gigantic oil reserves and a desire to make quick profits, Kazakhstani banks had borrowed a significant amount of money from US banks participating in hedge funds. By the end of 2007, half of the banks’ shareholder’s equities and liabilities were represented by international loans. Whereas in 2004, the international loans had represented only 38% of the balance sheet. The loan portfolio of the major 5 banks, which accounted for 70% of the total assets of the whole banking sector was also dicey. Loans for the construction sector, including mortgages, accounted for 30% of the total loan portfolio. As this sector was heavily affected by the crisis, it resulted in the freezing of many construction sites. The other part of loan portfolio represented the individual loans which also were not collected in time, as people had lost their jobs. From 2007, the Kazakhstani Government allocated around 40 million USD to solve the liquidity problems of the banking sector. However, it was not enough and the second wave of the crisis in 2008 was a severe hit for the banking sector in the country. Looking at this, the president Nursultan Nazarbayev created a National Welfare Fund “Samruk-Kazyna”. Its main functions were5: Realization of an anti-crisis program and economy stabilization, Assistance in diversification and modernization of the national economy, and Improvement of effectiveness of the fund-owned entities. The welfare fund received 10 billion USD, out of which USD 4 billion (480 billion KZT) was allocated towards supporting the banking sector in the country. In January 2009, the fund helped the two major and largest banks in the country namely, KazKommerts Bank and Halyk Bank by depositing 1 billion USD in each bank. Later the same was done with BTA bank and Alliance Bank6. It was also decided to acquire shares of these banks. Even though the banks were able to maintain their liquidity, the quality of the loan portfolio was still very poor since almost 2/3 of loans were classified as non-performing loans. In the beginning of February 2009, Samruk-Kazyna acquired 25% of the shares in KazKommerts Bank and Halyk Bank. It also acquired 75.14% of BTA Bank’s common shares, which was the main shareholder of TemirBank along with 76% shares of Alliance Bank shares. At the same time, the welfare fund also invested money in the above-mentioned banks for financing the primary and secondary sectors of the economy. In 2010, the welfare fund also purchased 79.93 % of TemirBank’s common shares. The main goal behind acquiring the shares was to provide the much-needed operational support along with restructuring of the financial obligation of the banks. After the recovery of the global economy in-, the Kazakhstani economy started to grow and the condition of the banking sector showed improvements as well. At the same time, the government decided to reduce number of banks in Kazakhstan, the total number of which was 38. The financial crisis revealed that small banks could not be sustained in the long run. In 2011 the minimum required capital requirements doubled from approx. 34 million USD to 68 million USD (5 billion KZT to 10 billion KZT). On February 4, 2013 Nursultan Nazarbayev, the President of the Republic of Kazakhstan, instructed the authorities at Samruk-Kazyna to sell the shares of the BTA Bank, JSC Alliance Bank and JSC TemirBank by the end of 2013. The reason being that the banking sector should be privately owned and state-owned banks should only serve a particular purpose niche player (for example – agricultural support or as a mortgage lending provider). “The sale of bank shares, as per the President instructions, is the next stage of the anti-crisis program of the KZ financial sector stabilization, which will relieve Samruk-Kazyna National Welfare Fund from the unusual functions of bank management. In general, the transfer of these financial institutions from state ownership to private ownership will have a positive impact on the financial market and will also facilitate more active participation of new bank owners in the development of the banking sector of Kazakhstan,” said Yelena Bakhmutova, Deputy Chairman of the National Security Fund of Samruk-Kazyna. In search for answers to address the paradox – options and decisions As Guram contemplated his upcoming meetings with the bank partners and top management, he was sure that acquisition of the BTA bank was not an option. The reason being that the bank was too huge for ForteBank and was also focused on working with individuals. Retail banking could therefore end up swallowing its main corporate banking focus. According to Guram, the acquisition of Temir and Alliance bank could, vice versa, strengthen ForteBank’s position in both fields. TemirBank was focused solely on corporate banking and Alliance Bank on retail banking. The merger of 3 banks would allow them to create a universal bank, working in both retail and corporate banking and at the same time giving more emphasis on corporate banking. A new and unique customer service and interaction model developed in ForteBank proved to be successful. However, due to the bank being small in size, it was not possible to understand its full potential. Other innovations of ForteBank could help in benefitting both the retail and corporate banking operations of the new bank. This opportunity was also challenging, as it would be the first trilateral merger in Kazakhstan and, if successful, it could be a first of its kind without any Government support. As, even in Europe, no banks had ever successfully accomplished the trilateral merger in the banking system. Guram would need a good M&A team of qualified professionals, who could be appointed from ForteBank and outside the bank. Thanks to Bulat experience in the banking sector, Guram had access to true professionals in the field as external consultants. He also thought to invite French investment bank Lazard and the American law firm White & Case which assisted Bulat with the sale of ATF bank in 2007 and thus were familiar with Kazakhstani realities. Guram could see the possible synergy effects: Optimization of expenses. Taking an average, 50% of total expenses – salaries, 10-20% of total expenses covered the branches operations. In the case of a merger, all 3 banks could be managed by one team and optimize its branch network. Business diversification. This would be a good opportunity for Forte to diversify its products and enter retail banking. Single IT systems, online banking, application etc. Market share and competitiveness. Due to the merger, the new bank would become larger and thus gain more market share and access to the new clients provided by Alliance and TemirBanks. Better access to capital market. Large banks were considered to be more reliable and therefore had better credit ratings and could attract larger clients. Brand loyalty. Larger banks were considered to be more reliable and individuals trusted them more. It was obvious that the merger needed to be done on the basis of Alliance bank, as it was larger than the other two banks. However, taking into account the vast capital deficit of 490 USD, Alliance bank’s capital would need to be stabilized by TemirBank and ForteBank, or other sources. Guram noted that TemirBank was in a relatively better financial position (see Exhibit 5). The debt restructuring process was finalized by summer 20107 and since then the bank showed good financial results and continued to work on cleaning its loan portfolio which resulted in a loss in 2013. With increased capital and an improved financial position, the bank could survive and develop further. Guram was concerned about Alliance Bank as its financial performance was poor (see Exhibit 6) and it also had a problematic history. In March 2009, during the Samruk-Kazyna audit, it was revealed that the bank violated the Kazakhstani banking law of issuing loans to foreign nationals, which were not even shown on the balance sheet. In April 2009 Alliance Bank announced a default on bond payments which were due on 10 April 2009 of a total amount of approx. 43 million USD (Seven billion KZT). The first restructuring completed by the end of 2010 helped to improve the bank’s financial position, however it was enough and bank continued to face liquidity problems. Non-performing loans accounted for half of the total issued loans. Even though a new restructuring plan was in place and Samruk-Kazyna ensured that it would first finalize the loan restructuring before the sale, the financial performance of the bank and its non-performing loans were still one of the major concerns. Previously during a similar restructuring of BTA bank, 75% of the existing loan portfolio was expected to not be collected from the clients, thus the discount on liabilities counted to 75% of existing claims8, however there were no guarantees that bank creditors will accept these new conditions of the second wave of the bank’s liabilities restructure. Guram wondered which acquisition strategy to offer. Was it better to acquire all the controlling stake in one go? Or to enter banks slowly, working together with Samryk-Kazyna on restructuring? And what price would be fair to pay for them? Discussion questions: 1. Conduct a financial analysis of the two target banks as of the year end 2013. Demonstrate if their performance has improved or deteriorated since 2006. 2. Given the large distressed portfolio and negative equity of the target banks, why would ForteBank still consider the merger and acquisition deal with Alliance and Temir. What synergies can you identify? 3. What is an expected fair price for TemirBank and Alliance Bank? (asset-based valuation) 4. As CEO, evaluate the options you have, decide and defend your decision. Exhibit 1. Kazakhstani banks asset-based ranking, 2013* Bank’s #, based on assets, as of 1 Sept, 2013 Bank Total Assets, as of 1 Sept, 2013 (thousand, KZT) Approx. Total Assets, as of 1 Sept, 2013 (thousand, USD)** 1 Kazkommertsbank JSC 2 618 - HalykBank JSC 2 373 - BTA Bank JSC 1 527 - Bank CenterCredit JSC 1 109 - SberBank JSC 935 - ATF Bank JSC 860 - Tsesna Bank JSC 771 - Kaspi Bank JSC 737 - Alliance Bank JSC 603 - Eurasian Bank JSC 536 - House Construction and Savings Bank JSC 331 - CityBank Kazakhstan JSC 326 - TemirBank JSC 292 - NurBank JSC 274 - HSBC Bank Kazakhstan JSC 175 - DeltaBank JSC 173 - Bank RBK JSC 172 - Alfa-Bank JSC 167 - Chinese Bank in Kazakhstan JSC 159 - Bank VTB Kazakhstan JSC 132 - Home Credit Bank JSC 103 - KazInvestBank JSC 102 - AsiaCredit Bank JSC 80 - RBS Kazakhstan JSC 77 - Astana-Finance Bank JSC 70 - EksimBank Kazakhstan JSC 59 - Bank Kassa-Nova JSC 50 - ForteBank JSC 41 - TPB China Kazakhstan JSC 25 - KziBank JSC 23 - QazaqBanki JSC 22 - Bank Positive Kazakhstan JSC 20 - Shinkhan Bank Kazakhstan JSC 19 - Zaman-Bank JSC 15 - Taib Kazakh Bank JSC 14 - Islamic Bank Al Hilal JSC 13 - PNB Kazakhstan JSC 13 - National Bank of Pakistan in Kazakhstan JSC 5 - Total Assets 15 036 - * https://forbes.kz/leader/veduschie_banki_kazahstana_-_2013_reyting_i_renking ** exchange rate 1 USD = 153,43 KZT Exhibit 2. ForteBank, Alliance and TemirBanks Picture 1. ForteBank building in Almaty Source: https://etoday.kz/destination/26689-v-sostave-rukovodstva-fortebank-proizoshli-kadrovye-izmeneniya.html Picture 2. ForteBank building in Astana (the capital of Kazakhstan) Source: https://lhk.kz/portfolio-item/%D0%B3%D0%BE%D0%BB%D0%BE%D0%B2%D0%BD%D0%BE%D0%B9-%D0%BE%D1%84%D0%B8%D1%81-%D0%B0%D0%BE-forte-bank/ Picture 3. ForteBank office design Source: https://forbes.kz/finances/finance/fortebank_prezentoval_novyiy_filial_v_semee Picture 4. ForteBank office design Source: https://kapital.kz/finance/59418/bankovskiy-ofis-yevropeyskogo-formata-otkryt-v-kaskelene.html Picture 5. ForteBank employees uniform Source: https://forbes.kz//process/v_uralske_otkryilsya_novyiy_filial_fortebank/? Picture 6. Alliance Bank building Source: https://akipress.com/news:554600:Court_approves_Alliance_Bank_restructuring/ Picture 7. Alliance Bank office design Source: https://ru.foursquare.com/v/%D0%B0%D0%BB%D1%8C%D1%8F%D0%BD%D1%81-%D0%B1%D0%B0%D0%BD%D0%BA-%D0%BE%D1%82%D0%B4-%D0%B3%D0%BE%D0%BB%D0%BE%D0%B2%D0%BD%D0%BE%D0%B9/4dd51fb2d4c0e6b33e4b5744 Picture 8. TemirBank’s building Source: https://tengrinews.kz/crime/kraja-temirbanke-7-let-osujdenyi-pohititeli-37-millionov-258913/ Exhibit 3. About Kazakhstan Picture 9. Map of Kazakhstan with major cities and towns Source: https://www.britannica.com/place/Kazakhstan Picture 10. Astana (the capital) main square and Baiterek monument Source: https://ru.wikipedia.org/wiki/%D0%91%D0%B0%D0%B9%D1%82%D0%B5%D1%80%D0%B5%D0%BA_(%D0%BC%D0%BE%D0%BD%D1%83%D0%BC%D0%B5%D0%BD%D1%82) Picture 11. Almaty (the largest city and the former capital) main square and Golden men monument Source: https://tengrinews.kz/kazakhstan_news/budet-situatsiya-almatyi-11-maya-rasskazali-akimate-401690/ Exhibit 4. Summarized financial performance of ForteBank (mln, KZT) - Income statement Interest Income- Interest Expense (327) (571) 666) (840) Reserve on non-performing loans (478) (344) 89 (1 452) Net Interest Income- Total operating income- Total operating expenses (1 676) (1 895) (2 783) (3 304) Income before income tax - Income tax 346 (130) (66) (195) Net profit - Balance Sheet Cash - Loans for other banks 387 69 1,044 27 Financial Instruments- Loans issued - Reserves on non-performing loans (1 713) (1 351) (1 256) (1 262) Other investments - - 315 - Non-Current assets- Assets for sale Other Assets- Total Assets- Capital/shareholders' equity- Reserves - - - 645 Retained Earnings (2 503) (2 041) (1 824) (1 908) Total Shareholders’ equity - Borrowings from other banks- Clients’ Deposits- Other liabilities- Subordinated debt - Total liabilities- Exhibit 5. Summarized financial performance of TemirBank (mln KZT) - Income statement Interest income- Interest expense (8 235) (23 226) (27 133) (30 129) (24 120) (16 337) (15 137) (15 533) Reserve on non-performing loans (3 071) (5 555) (8 289) (75 112) - (7 839) Net interest income- (70 214) (15 - Non-interest income- - Non-interest expense (4 588) (10 169) (10 262) (8 976) (8 870) (10 371) (11 464) (12 627) Income from the restructure of liabilities 93 768 Impairment (loss)/benefit (on loans issued) (1) (323) (77) (392) (9) (119) (102) (203) Income before tax- (3 422) - (3 553) Income tax benefit (expense) (293) (660) - (1 166) (2 343) (2 077) Net profit / (loss- (3 653) - (5 630) Balance Sheet Cash - Funds in other banks, including deposits and loans for other banks- Financial Instruments- Loans issued - Reserves on non-performing loans (4 452) (10 123) (18 422) (90 744) (74 641) (73 129) (72 233) (77 262) Loan issued, net- Other investments- - - Non-Current assets- Current Tax Asset- Deferred Tax Asset - 549 7 472 Other Assets- Total Assets- Capital/shareholders' equity- Treasury shares (107) (107) (107) (107) (107) (179) (179) Paid-In Capital 21 - - - - - - - Reserves 2 - - - Retained Earnings- (84 992) (4 129) - (4 933) Total Shareholders’ equity - - National Bank and Government Deposit/Payables 89 50 70 - - - - - Funds from other banks, including deposits and loans- Clients’ Deposits- Bonds Issued- Other liabilities- Subordinated debt 5 099 - - - - - - - Total liabilities- Exhibit 6. Summarized financial performance of Alliance Bank (mln KZT) - Income statement Interest income- Interest expense (40 350) (92 889) (100 677) (80 627) (39 990) (39 248) (45 736) (52 764) Reserve on non-performing loans (14 032) (25 571) (242 273) - - - - - Net interest income- - Non-interest income- (158 030) - Non-interest expenses (11 301) (22 401) (21 889) (22 331) (23 132) (20 576) (19 051) (18 169) Income from the restructure of liabilities 324 745 Impairment (loss)/benefit (on loans issued) (356) 79 (27 175) (174 - (78 405) Income before tax- (386 556) - (66 658) Income tax benefit (expense) (5 602) - (25) - (18 190) Net profit / (loss- (386 210) - (84 848) Balance Sheet Cash - Funds in other banks, including deposits and loans for other banks- Financial Instruments- Loans issued - Reserves on non-performing loans (21 113) (43 527) (269 790) (454 175) (370 411) (294 024) (283 306) (363 752) Loans issues, net- Other investments- - - - - - Non-current assets- Financial assets for sale (investment in the parent company) 1 008 - - Current tax asset - - Deferred tax asset - - - - -** Other assets- Total assets- Capital/shareholders' equity- Paid-In capital- Restructure reserve - - - - (84 955) (25 981) (25 981) (25 981) Reserves- - (5 289) (6 790) Retained earnings- (326 776) (625 099) (290 570) (250 575) (249 743) (334 474) Total shareholders’ equity - (227 180) (525 771) - (75 085) National Bank deposit/payables- - - - - - Loan from the Government - - - Funds from other banks, including deposits and loans- 647*- Borrowings from fin. institutions - 832* - - - - Clients’ deposits- Bonds issued- 279*- Other liabilities- Repurchase agreement liability  - Subordinated debt- Special reserve for guarantees - - 136 972 - - - - - Loan from the parent company - - - 105 000* - - - - Other loans - - - 45 272* - - - - Total liabilities- * liabilities are part of the restructuring plan ** in December 2013 the bank went into revision of the business-model and there were uncertainties about bank’s ability to generate income. Thus, the recognition of Deferred Tax Asset was stopped in 2013. References 1) https://kursiv.kz/news/2010-10/metrokombank-pered-vyborom 2) https://bulatutemuratov.kz/stati/kak-bulat-utemuratov-sozdal-privlekatelnyj-dlya-inostrannyh-investorov-finansovyj-institut-i-chto-iz-etogo-poluchilos/ 3) https://forbes.kz/news/2012/05/23/newsid_3942 4) https://forbes.kz//finances/investment/kazahstanskiy_bank_s_evropeyskim_stilem 5) Smagulova, S., Nurseiytova, G., Madjarova, R., Spankulova, L., Koptayeva, G., Dzhunusov, A., … Imashev, A. (2018). Entrepreneurship and Investment Environment In the Central Asian Transition Countries : Case Kazakhstan. Academy of Entrepreneurship Journal, 24(4) 6) Omarkhan D., Konopyanova G. (2011). Features of the formation and development of the banking system of the Republic of Kazakhstan. Vestnik KAFU, №3 - 2011. p. 79 (retrieved: http://www.vestnik-kafu.info/journal/29/) 7) Babak V. (2009). Economy of Kazakhstan and Financial crisis. 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