OAO Sberbank, Russia’s largest lender, is halting equities operations in Kazakhstan as margins shrink and the banking regulator tightens capital requirements, according to three people with knowledge of the matter.
Sberbank will close brokerage operations while continuing to offer investment banking in the Central Asian nation after integrating the local unit of Troika Dialog, said the people who asked not to be identified because the information isn’t public. The state-run lender bought Troika, Moscow’s oldest brokerage, last year. Troika Dialog Kazakhstan’s license won’t be renewed, they said.
Sberbank’s press services in Moscow and Almaty didn’t respond to e-mailed and phoned requests for comment.
The Kazakhstan Stock Exchange’s equities index was the fifth worst performing of 94 major gauges tracked by Bloomberg last year, slumping 14 percent. The central bank is imposing stricter rules on minimal capital and trading volumes that are forcing some smaller boutiques to close. The number of brokerages will drop to about 10 from 44 at the start of 2012, according to Orken Invest Jsc, one of the casualties.
Kazakhstan is embarking on the biggest sale of state assets since the nation of more than 16 million people won independence two decades ago. The so-called People’s IPO program may spur demand for financial services and generate a windfall in commissions for the few brokerages left, according to Damir Seisebayev, managing director of Orken.
At the same time, Kazakh President Nursultan Nazarbayev has ordered the creation of a single, state-run pension fund to consolidate 3.2 trillion tenge of assets now managed by 11 funds, cutting the number of potential clients for brokerages
Most of Troika’s staff in Almaty, the Kazakh financial center, will be offered positions within Sberbank, the people said. Troika has about 10 people there. Sberbank entered Kazakhstan in 2006 after buying Texakabank, a Kazakh-American lender, and now has a 5 percent market share and over 10,000 corporate clients in the country, according to its website.
In Ukraine, Sberbank also plans to combine and trim Troika’s local unit, two of the people said. Sberbank integrated Troika’s Russian business last year.
Renaissance Capital, the Moscow-based investment bank owned by Russian billionaire Mikhail Prokhorov, closed its sales, trading and research in Almaty and Kiev last year as business slumped.