Kazakhstani banks facing pressure to consider bids in global liquidity crunch

Kazakhstan Materials 4 October 2007 23:42

( Interfax )- The liquidity crunch in the international bond markets could increase pressure on Kazakhstan-based banks to consider deals with international investors, says Financial Times.

Speaking on the sidelines of the VIII Almaty Banking Conference in Kazakhstan, one senior buy-side source said that now was a good time to look to do deals in the country.

He said that, until the credit crunch had taken hold, prices paid for banks in Kazakhstan and Ukraine had been too high.

"If the liquidity crisis continues, I would expect shareholders to negotiate a lower price to sell their assets [because funding from foreign institutions has dried up]," he said. To continue to accelerate the development of their business, he said, Kazakhstani banks would now need to consider joint ventures or the sale of stakes to large banking institutions.

A sell-side advisory source agreed with the view that the liquidity crisis had increased the pressure on Kazakhstani targets to listen to approaches. He said that as a result of the crisis, the price of shares in banks had fallen and that it was now a good time for acquirers "if they can find sellers".

He said, however, that firesales were not taking place and that sellers would likely try to avoid considering bids until exit multiples had once more returned to the 4x assets level. He predicted this could take place by early 2008 once the market had stabilised.

When asked about potential bidders, this source pointed to Raiffeisen, Societe Generale, Temasek and BNP Paribas. He said Unicredit's acquisition of ATF Bank made it unlikely it would consider further deals in Kazakhstan.

On potential targets, he pointed to Nurbank and Temirbank. He described Bank Turanalem, Kazkommerzbank and Halyk Bank as "pretty large," adding that potential acquisitions would be "below that watermark."

One source familiar with Kazakhstan banks sounded a note of caution. Pointing to strong growth in the sector, he said Kazakhstani banks had "not been keen to entertain bids from foreign players" as they have "no need to [consider deals]".

"If you have growth of 60% in the financial services sector, you can be content with growth of 50%, even if you're losing market share," he said.

He said Kazakhstani banks were interested in foreign capital, but were not necessarily interested in the foreign management expertise or IT capability that a deal with an international banking group might bring.