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“We haven’t really seen an adjustment of prices to match the scale of currency devaluation yet” |
Kazakhstan’s banks are in trouble – again. That was the message from Fitch Ratings, which in late January downgraded the country’s largest lender, Kazkommertsbank (KKB), to triple-C and warned of severe capital pressures across the rest of the sector.
Among Kazakh bank watchers, the news inspired a sense of déjà vu. Seven years after the global financial crisis, the sector is still struggling to deal with the legacy. Bad debts from that era continue to weigh on bank balance sheets, nowhere more so than at KKB, which two years ago took over twice-defaulted BTA Bank and its massive portfolios of pre-2009 non-performing loans.
These issues have once again been thrown into sharp relief by the recent dramatic decline in Kazakhstan’s economy. The fall in the price of oil, the country’s main earner, not only slashed national revenues last year but also put great pressure on its pegged currency.
By August, the cost to local businesses of keeping the tenge at KT180 to the dollar, while the currencies of neighbouring economies – most notably the rouble – followed the oil price down, had become prohibitive.
