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  • The Liquidation of Delta Bank

    21.11.2017 | Comments | Economy | 91 Daniyar Nurbayev

    At the beginning of November 2017, the National Bank of Kazakhstan (NBK) announced that the licenses for banking and other transactions and activities on the securities market of Delta Bank were revoked and the bank will be liquidated. It was mentioned that the NBK has already appointed a temporary administration and starting from November 3, 2017, all transactions and operations related to the bank’s and clients’ accounts are terminated.

    Delta Bank was founded on September 1, 1993, in Aktau, initiated by large oil and gas companies in Western Kazakhstan. The bank is solely owned by grain trader Nurlan Tleubayev, who purchased his first stake in the bank in the amount of 9.75% in January 2017 increasing it to 49.67% in February 2017 and to 99.77% in the second quarter of 2017 (Kazakhstan Stock Exchange, 2017). As of the end of September 2017, Delta Bank was ranked 14th out of 33 largest commercial banks in the country, accounting for 1.05% (255.7 billion tenges) and 2.27% (315.7 billion tenges) of the total banking assets and loans, respectively. Delta Bank was in the small number of banks that prefer to finance the development of the agriculture sector. According to the 2015 financial report[1], nearly 31% of the bank’s loans or 102.3 billion tenges were lent to the agriculture sector. For comparison, only 4.85% of the total banking loans or a little more than 600 billion tenges were lent to the agriculture, meaning that Delta Bank accounted for 16.7% of the total banking loans to the sector in 2015. The fact that the bank highly invested in the agriculture sector, the profitability of which accounts for only 5%-6%, was one of the reasons for the bank’s current difficult financial situation.

    In November 2016, the NBK suspended licenses for accepting deposits of individuals, opening bank accounts of individuals of Kazinvestbank and Delta Bank. The Governor of the NBK Daniyar Akishev explained that the results of the stress tests conducted by the first tier bank revealed that these two commercial banks had some financial difficulties (Kapital (a), 2017). It is worth noting that at the same time Standard and Poor’s rating agency changed Delta Bank’s credit rating from CC to D (Default). In December 2016, Delta Bank was able to convince the NBK that it would improve its financial position, while the NBK revoked the license of Kazinvestbank and later liquidated it. At the beginning of 2017, Delta Bank changed its shareholders and management, which allowed the bank in February 2017 to get a short-term loan in the amount of 45.6 billion tenges from the NBK to cover its current liabilities (Kapital (b), 2017).

    However, this loan was not enough to solve the financial problems of the bank. Moreover, the situation worsened in 2017. In April 2017, the Kazakhstan Stock Exchange announced that the commercial bank was suspended from participation in the stock exchange trading because of non-fulfillment of its obligation (Kapital (c), 2017). Later in May 2017, it was the second time the NBK suspended licenses for accepting deposits of individuals and legal entities, opening bank accounts of individuals and legal entities of Delta Bank. The licenses have been suspended until June 15, 2017. In the middle of June, the NBK prolonged the suspension until August 3, 2017, and in the beginning of August, the NBK prolonged the suspension until the end of October 2017.

    The NBK suspended the licenses mostly because the bank’s efforts to improve the financial situation were ineffective. In the beginning of March 2017, the overdue loans of the bank skyrocketed to 96.55%[2] (384.4 billion tenges) of the total loans from 1.86% (7.6 billion tenges) in February 2017. Moreover, the shares of non-performing loans[3] (NPLs) also surged in 2017. For instance, in May 2017, recorded NPL level reached 98.39%, which is an unnaturally high amount for banks. At the time of the revocation of the banking license, the share of NPLs in the total loans of Delta Bank increased to 99.73% (Tengrinews, 2017). Furthermore, as of November 2017, the bank’s cash and cash equivalents stood at 215.1 million tenges, while its short-term obligations totaled 79.8 billion tenges, meaning that the bank does not have enough current assets to pay out its current liabilities. Taking into account the fact that Delta Bank’s main shareholder was not intended to take measures aimed at the increase of bank capitalization, the NBK had to take radical steps. It is important to note that since the bank is a participant of the Kazakhstan Deposit Guarantee Fund aimed to protect individuals’ deposits in tenge and foreign currencies with maximum limits of the guaranteed 10 million tenges and 5 million tenges, respectively, guaranteed compensations would be paid to the depositors in accordance with the established procedure.

    Overall, the NBK’s decision to liquidate the bank was appropriate. First, since the bank is quite small, its bankruptcy will not contribute to any systemic risks. Second, since the main shareholder is not intended to invest his own money to improve the capitalization rate, the only option to save the bank is to nationalize it. However, the government’s experience with troubled BTA Bank, which was nationalized in 2009, showed that nationalization of commercial banks might not be the best decision for the rehabilitation of the banking and financial sector.


    Kazakhstan Stock Exchange. (2017). Delta Bank. Retrieved from Accessed on: 04.11.2017.

    Kapital. (a). (2016). Daniyar Akishev explained the restrictions for KazInvestBank and Delta Bank Accessed on: 04.11.2017.

    Kapital. (b). (2017). The terms on which the NBK allocated the funds to Delta Bank. Retrieved from  Accessed on: 04.11.2017.

    Kapital. (c). (2017). Delta Bank was suspended from participation in trades on KASE. Retrieved from Accessed on: 04.11.2017.

    Tengrinews. (c). (2017). National Bank of Kazakhstan explained the deprivation of Delta Bank license. Retrieved from Accessed on: 04.11.2017.

    [1] The bank did not publish its financial report for 2016.

    [2] The average level of the loans with overdue of the banking sector was 12.2% in 2016.

    [3] Loans with overdue over 90 days.

    Note: The views expressed in this blog are the author's own and do not necessarily reflect the Institute's editorial policy.

    Tags: Kazakhstan, Economy, Banking Sector


  • Junior Research Fellow

    Daniyar Nurbayev

    Daniyar Nurbayev is a research fellow at the Eurasian Research Institute. Daniyar completed his bachelor’s degree in Finance in the Kazakh-British Technical University in 2013. In addition, he holds Masters degree in Finance from the Kazakh-British Technical University (2015).