State control over the banks: timely but not long - run

ASTANA. 13 February. KAZINFORM /Aydos Togyzbaev/ Last week, the National Welfare Fund ?Samruk-Kazyna? became the owner of controlling stakes of two Kazakh banks - the Alliance Bank and the BTA. Thus the state saved the financial institutions from bankruptcy, with their liquidity and ability to continue working for the country's economy.

It is important to clearly understand that this measure was the only effective way out of the adverse situation of the banks. Moreover, this Government?s decision is a temporary measure, aimed to help the banks successfully overcome their problems and get out of the crisis without losses. After all, they both occupy significant place in the domestic financial system as an active lenders of the real sector of economy. Thus, the share of the BTA on the crediting market is 25%, while that of Alliance is 8%. Here we do not speak about the amount of services provided to the population and domestic companies by them. The Government could not prevent the default of banks, which really threatened them in the near future. Thus, according to the Minister of Finance Bolat Zhamishev, "recently JSC" Alliance Bank" has faced with obligations and the risks to its sustainability". A Chairman of the National Bank of Kazakhstan Grigoriy Marchenko, said that "recently the BTA has maintained itself on the short-term measures and support from the National Bank". The "Samruk-Kazyna" Fund?s share in bank capital is a stopgap measure, rather than nationalization. On the other hand, the world community has recently witnessed a surge of "nationalization" of the banks even in the "liberal" European countries. "The frontrunners" in this case are the two countries - Iceland and Britain. Last autumn, the authorities of Iceland bought the three largest Icelandic banks - Kaupthing Bank, Glitnir Bank и Landesbanki Islands. The Government of Great Britain has entirely nationalized the Brad-ford&Bingley and Northern Rock. In addition, last year the Governments of Belgium, the Netherlands and Luxembourg jointly acquired 75% stake of Fortis group. In analysts? view there were no alternatives to this "nationalization". If banks had not received funding, they would have gone bankrupt, causing a great panic, and a negative impact on business development in these countries and their economies as a whole. So the position of people who politicize and question the need and importance of Kazakhstan's way out of a possible banking crisis is not very clear. Move of the two largest Kazakh banks under the control of the state is a preventive and temporary measure, aimed to improve the financial system of the country, revitalize the business, construction sector, agriculture and etc. As Prime Minister Karim Massimov said, "according to the current legislation, it has a time frame and a subsequent withdrawal of the state from the shareholders". As we see, the Government has more pros than cons in taking this decision. And cons or minuses? What are they? The only one: some of the top managers lost their posts. So who disturbed them effectively and efficiently manage the banks?