INTERVIEW: Bank CenterCredit finds its perfect Seoul mate

By bne IntelliNews October 24, 2008

Guy Norton in Almaty -

With fears about the financial stability of the Kazakhstan banking sector reaching new heights in recent weeks, Bank CenterCredit's announcement that it had secured regulatory approval for its union with Kookmin Bank, South Korea's top financial institution, couldn't have been better timed.

While Bank CenterCredit (BCC) has traditionally enjoyed a well deserved reputation for being one of the more prudently managed financial institutions in Kazakhstan - it largely eschewed the option employed by many of its larger rivals of relaying on international bonds rather than domestic deposits to finance its growth - attracting Kookmin Bank in August as a strategic partner clearly ranks as a major coup and will undoubtedly help to boost its current number six position in the Kazakhstan banking league tables.

As well as the $500m that Kookmin paid for an initial 23% stake - $240m of which now placed on deposit at the bank by the selling shareholders - there's the prospect of more to come, with Kookmin ultimately seeking to achieve a 50.1% controlling stake in BCC within the next 2-1/2 years. Kookmin's total investment is set to reach $1.2bn, making it the largest overseas M&A transaction by a Korean bank.

But beyond the obvious financial benefits of the sale Timur Ishmuratov, managing director at BCC, says the Kookmin transaction will help to transform the bank's franchise and enable it to be a major force not just in Kazakhstan but in the rest of the Commonwealth of Independent States as well. "Kookmin will look to invest in the surrounding region through Bank CenterCredit," says Ishmuratov, who heads up the international department at the bank.

In addition to an existing operation in Russia, BCC Moscow, Ishmuratov says that Bank CenterCredit is awaiting approval for a banking licence in Kyrgyzstan where it currently only has a representative office. He adds that the bank is also looking at setting up shop in Turkmenistan, Ukraine and possibly Belarus in the foreseeable future.

Ishmuratov also says that with Kookmin on board as a major shareholder, BankCenterCredit is well placed to take advantage of the growing trade between Kazakhstan and South Korea. "Kazakhstan and Korea have had very strong trade links for over 10 years," says Ishmuratov. Kazakhstan principally exports oil and gas and other commodities to Korea, while importing high-tech goods and equipment in return. Ishmuratov says the South Korean government is also supportive of South Korean companies expanding their operations into Central Asia, with Kazakhstan as the most developed economy in the region being a natural starting point for such expansion.

At home

As well as enabling BCC to add an international dimension to its operations, Ishmuratov says that the strategic partnership with Kookmin will deliver tangible benefits for the bank's domestic franchise, which like Kookmin's is predominantly focused on servicing retail clients and small and medium-sized enterprises. "We will be able to introduce new products and services as a result of the Kookmin Bank deal," says Ishmuratov.

In particular, he believes that Kookmin's expertise in fields such as credit cards will be of major assistance to BCC. "Korean banks are very strong in the credit card business and Kookmin has a 20% market share in Korea." With Kookmin's support Bank CenterCredit is looking to aggressively up its share of the credit card market in Kazakhstan from 6% at present to around 15%.

Overall, Ishmuratov claims that in the next two to three years the bank will be able to increase its aggregate market share of the Kazakhstan banking market to 15%-18% from around 7.5%-8% at present. At the less aggressive end of the scale, that would position the bank as the number four player by assets, with third place potentially achievable, says Ishmuratov.

While acknowledging that BCC is hardly unique in attracting a major foreign backer in recent times - traditional arch-rival ATF Bank was recently acquired by UniCredit Group, Ishmuratov claims that the overall fit between Kookmin and Bank CenterCredit will be far less disruptive than the Italian bank's $2.2bn purchase of a 100% holding in ATF Bank. Not only are both Kookmin and Bank CenterCredit similarly retail and small business-focused, but also Ishmuratov believes that the integration issues between the two banks will be far smoother and less disruptive than has been the case with ATF Bank and UniCredit. "The strategic business focus will stay the same and the top and middle management remains unchanged at Bank CenterCredit, whereas at ATF Bank they have all left."

In terms of the future prospects for the country's banking sector, Ishmuratov believes that while 2009 will prove a challenging year, dire predictions about the meltdown of the financial services sector in Kazakhstan have ultimately proved wide of the mark. "In our opinion the situation in the banking sector is improving - much of the debt due this year has been repaid."

Send comments to The Editor

Related Articles

Retail trade slows in Kazakhstan amid economic uncertainty

Naubet Bisenov in Almaty - A free-floating exchange regime for Kazakhstan’s currency, the tenge, is taking its toll on retail trade as the cost of imports rise. While prices have not changed ... more

bne:Chart - Russia begins to steady the ship according to latest Despair Index

Henry Kirby in London - Ukraine and Russia’s latest “Despair Index” scores suggest that the two struggling economies could finally be turning the corner, following nearly two years of steady ... more

New Kazakh central bank governor re-adopts free floating regime

bne IntelliNews -   The National Bank of Kazakhstan, the central bank, has re-adopted a free-floating exchange regime under the new governor, Daniyar Akishev, who has ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.