For the best part of the past decade banks from Kazakhstan have been held up as paragons of virtue: universally seen as much better managed than their Russian counterparts – if that’s not to damn them with faint praise. So it’s ironic that they should now suddenly be viewed as risky credits in the context of a threatened global credit squeeze – if not a quite a crunch – in the wake of the fallout from the sub-prime fiasco in the US.
Ironic, but not wholly unjustified. For most of their existence Kazakh banks have been regarded as savvy operators, combining dynamic growth with top-notch risk management. Now, however, people are beginning to wonder if the banks aren’t becoming too promiscuous in their pursuit of growth at all costs and haven’t become too addicted to higher-risk lending funded by frequent – some would argue too frequent – visits to the international bond and loan markets. In 2006, Kazakh banks raised $18 billion overseas, more than doubling their international borrowings to total $33.3 billion.
Certainly, nobody could accuse the Kazakh banks of lacking either ambition or imagination – they have often been the first issuers from the former Soviet Union to test investor appetite in new currencies or new structures, more often than not with highly successful transactions.