KAKAKHSTAN'S BANKING ASSETS may be equivalent to only a third of GDP, but the sector has been growing at a rate of 50% a year for the past four years. "The place is booming," says Ray Webber, CEO of HSBC Kazakhstan, one of the three western banks operating in the country. While foreign investors complain of a difficult business climate, Kazakh paper is routinely oversubscribed and retail assets grow at a dizzying rate.
Tight supervision has been the secret of Kazakhstan's banking success. The central bank, the National Bank of Kazakhstan, played the key role in cleaning up the sector in the mid-1990s.
Today, it is a measure of its confidence that it relinquished control over the supervision of the country's financial sector as of January 1 to the Agency for Financial Supervision, under the leadership of Balat Zhamishev, who was appointed to head the body during his second stint as deputy governor.
"Local banks are well managed and well capitalized," says Douglas Kennedy, manager of the Kazakh subsidiary of ABN Amro. "They don't yet have the entire product range that a western bank would have, but they are using conservative practices to deliver."