China CITIC Bank
Chinese banks have been present in central and eastern Europe for 15 years, but – with the exception of ICBC’s purchase of Turkey’s Tekstilbank in 2014 – outright acquisitions of local lenders have been rare. This makes Citic Bank’s takeover of Kazakhstan’s Altyn Bank, which was completed in May, all the more important.
Kazakhstan is not only geographically at the heart of the New Silk Road but has also positioned itself as a key political player in the initiative. In 2013, when China’s president Xi Jinping first laid out his vision for BRI, he did so in the Kazakh capital, Astana. The Central Asian state is also home to one of the landmark BRI projects, the Khorgos dry port on the border with China.
The opportunities presented by such cross-border cooperation have already attracted more than 300 Chinese companies to register operations in Kazakhstan. To service this growing market, Citic Bank in May completed the purchase of a 50.1% stake in Altyn Bank from Kazakh market leader Halyk Bank.
China Shuangwei Investment Corporation, a wholly owned subsidiary of China Tobacco Corporation, also took a 9.9% shareholding. The remaining 40% will be retained by Halyk.
Altyn, which Halyk bought from HSBC in 2014, has assets of just $1.2 billion. Its new owners plan to boost that to $4 billion by 2021, while at the same time pledging to maintain a return on equity of at least 16%.
Citic Bank has indicated its intention to use Altyn to develop cross-border renminbi clearing, as well as to provide trade finance and investment banking services to local, multinational and Chinese corporates. Altyn will also benefit from knowledge and technology transfers from its new majority shareholder.
The acquisition represents a big step in the development of both Chinese-Kazakh relations and the BRI strategy of Citic Group, which has also this year taken over the Czech operations of troubled Chinese conglomerate CEFC Energy.