Motives for Mergers and Acquisitions in the Banking Sector of Kazakhstan

Yelena V. SMIRNOVA
Suleyman Demirel University, Almaty, Kazakhstan

(Smirnova, 2008) This paper is a study on the motives of banks in Kazakhstan, which is a
young country that got independence recently in the year 1991 after the Soviet Union’s
subsidence. They have a two tier banking system with National Bank in the first tier and others
in the second tier. The country has gone through enormous changes of which M&A and
reorganization activities contributed significantly. The first wave of M&A activity took place
in the 1990’s to stabilize the banking sector by merging the weak and insolvent banks. The
second wave in 2000’s was a result of governments intervention to nationalize banks and the
interest of foreign banks in local banks as a part of expansion activity. This paper gives insights
on the internal and external motives that the banks had from M&A activities. Internal motive
showed that foreign banks were mostly interested in growth and hence expanded into the CIS
countries which helped them to increase client base. Other motives such as increasing revenue,
capital and shareholders wealth along with product diversification was seen. An EXIM bank
was merged with a development bank to increase public investments for improving the
economy. External motives were highly influenced by political forces such as state
reorganization, privatization and nationalization programs. Other external motives were
towards implementing new technologies, enhancing the quality of service, becoming more
competitive and beating extreme economic conditions. The paper encourages researchers to
undertake studies of valuable knowledge to understand various motives behind M&A deals.

Bibliography
Smirnova, Y. V. (2008). Motives for Mergers and Acquisitions in the Banking Sector of
Kazakhstan. Economic Question, Issues and Problems, 12, 79–98.