bne -

RSK Bank, the largest bank currently in state hands in Kyrgyzstan, is to be privatised by 2017, as part of the government's medium-term development strategy. Smaller state-owned banks including Aiyl Bank may also be sold off.

IMF Resident Representative in Kyrgyzstan, Koba Gvenetadze, announced October 29 that the Kyrgyz government has drawn up plans to sell off a 51% stake in RSK. "Its sale could happen in 2016 or 2017. It is preferable to privatize the banking sector, because private owners manage it better," he told a press conference in Bishkek, according to 24.kg. Gvenetadze also recommended the state sell Aiyl Bank.

The Cash and Savings Company was founded in 1996. It was rebranded as RSK in 2008 after obtaining a banking licence. According to the lender's website, it currently has 51 branches across Kyrgyzstan, registered capital of over KGS1.24bn ($25.6m) and total assets of over KGS10bn. It paid more taxes than any other Kyrgyz commercial bank in the first half of 2013.

Aiyl Bank, also one of Kyrgyzstan's largest banks, is focussed on the agricultural sector. It was launched in December 2006 as successor to the government's Kyrgyz Agricultural Financial Corporation (KAFC). The parliament approved plans to sell off 67% in May 2008, and instituted reforms to allow Aiyl to provide a full range of traditional banking services.

However, the April 2010 revolution, followed by the nationalisation of five commercial banks - including the country's largest, AsiaUniversalBank (AUB) - caused a major setback for development of the banking sector. AUB was eventually split into a "good bank" and "bad bank" and rebranded as Zalkar. In April, Kyrgyzstan's Agency for Reorganisation of Banks and Debt Restructuring (DEBRA) announced that 90% of the bank would be sold off to Russian investment group Investment and Trade Business Holding.

Although both RSK and Aiyl are in better financial shape than AUB/Zalkar, Kyrgyzstan has struggled to sell off state-owned assets in the last three years, with many investors deterred by the country's two revolutions and perceptions of instability. Other major assets including Alfa Telecom, the operator of the Megacom mobile network, remain in state hands despite a series of attempted auctions.