Market Participants' Opinions
Nearly all experts surveyed agree that OTP Bank may enter Kazakhstan. The head of Halyk Bank, Umut Shayahmetova, believes that the arrival of foreign banks, including Hungarian ones, is a normal market trend.
“I cannot specifically comment on Hungarian banks, but I do know that OTP Bank has already entered Uzbekistan by acquiring a bank as part of the privatization process. The more large foreign banks with good standards, the better. However, it is important to note that there are already 12 foreign banks operating in Kazakhstan out of 21 registered. Their combined share in the economy's lending does not exceed 5%,” Shayahmetova noted.
She added that attracting foreign banks to Kazakhstan should not be an end in itself. According to Shayahmetova, foreign financial institutions can directly lend to Kazakhstan's economy without needing a physical presence in the country. She emphasized that such organizations must be interested in taking on risks associated with corporate clients and investing funds in Kazakhstan's economy.
Financial analyst Andrey Chebotarev also believes that OTP Bank has the best chance of entering the Kazakh market, as it is already present in Russia and has experience working in post-Soviet countries. The OTP Bank group operates in 12 countries, including Albania, Bulgaria, Croatia, Serbia, Ukraine, Russia, Moldova, Montenegro, Slovenia, and Uzbekistan.
Regulator's Position
The ARRF reported that as of February 24, 2025, there have been no requests from Hungarian banks to open branches or subsidiaries in Kazakhstan. The regulator reminded that negotiations were held at the end of 2024 with the two largest commercial banks in Hungary—OTP Bank and MBH Bank. The parties agreed to continue regular mutual contacts to discuss opportunities for expanding cooperation in the banking sector.
The ARRF also indicated that during the visit of Kazakhstan's President Kassym-Jomart Tokayev to Hungary in 2024, a memorandum of cooperation was signed with the Hungarian National Bank (Magyar Nemzeti Bank). This document was adopted to ensure more effective cross-border supervision of banks in line with Basel Committee standards.
The ARRF also reminded about Tokayev's directive from 2023, which tasked attracting reliable foreign banks to the country and increasing competition in the market. To achieve this, the regulator plans to ease the requirements for opening foreign banks or their branches. The list of required documents will be reduced, and regulatory requirements for branches of non-resident banks will be lowered. The agency noted that the current licensing process for foreign banks consists of two stages and can take up to a year.
Requirements for Foreign Banks to Open a Branch in Kazakhstan
In the first stage, the financial organization must submit an application to the ARRF for permission to open a bank or branch of a non-resident bank. Within this document, shareholders must obtain consent to acquire the status of a banking holding and/or a major participant in the bank.
The primary requirements for those wishing to open a foreign bank in Kazakhstan concern financial stability, impeccable business reputation of shareholders, and the parent company's possession of a minimum necessary credit rating from an international rating agency. The documents for establishing such a financial organization are reviewed by the authorized body within 65 working days.
After obtaining permission, the applicant must within one year:
- complete all organizational and technical activities in accordance with the requirements of the National Bank and ARRF;
- hire appropriate personnel;
- approve rules for conducting banking activities;
- ensure the availability of its own premises;
- register with the state corporation “Government for Citizens”;
- pay the bank's authorized capital/form assets of the non-resident bank branch, accepted as reserves;
- conduct state registration of the bank's share issuance.
Then, the foreign bank must submit documents to the ARRF to obtain a license for conducting banking and other operations, including those necessary for the approval of candidates for leadership positions. The documents for obtaining a license are reviewed within 30 working days.
In November of last year, the ARRF reported on attracting three foreign banks to the Kazakh market. According to the regulator, these are the Korean microfinance organization BNK, which is undergoing transformation, the Islamic bank Al Hilal, acquired by the UAE group Abu Dhabi Commercial Bank, and Bereke Bank, sold to Qatar's Lesha Bank. All of them have been operating in the country for several years.
Additionally, two microfinance organizations with foreign capital, Solva and KMF, are in the process of converting into banks. At the end of last year, the first was denied a permit due to non-compliance with regulatory requirements. The head of the group, Konstantin Barabanov, stated that “the regulator did not have enough time to fully review all the company's documents” and make a decision within 120 days.