Glamorous brand new buildings, glossy advertising campaigns and sexy image-building are the most visible features of Kyrgyzstan’s fledgling banking sector today. The country has liquidated a number of troubled banks, thereby avoiding the costly bail-out operations which have left neighbouring Kazakhstan’s banking sector in persistent limbo. It means a fresh start, but legislators are struggling to keep regulations at pace with the banking sector’s growth, in particular in the face of tough competition from micro-finance firms which are also mushrooming in the country.

photograph © 2014 Charles van der Leeuw

photograph © 2014 Charles van der Leeuw

“Banks in Kyrgyzstan face numerous challenges beyond the accessibility problems caused by the country’s mountainous terrain. A distrust of conventional banking and strong position of microfinance institutions means the central Asian state is under-penetrated by conventional lenders, a situation that is slowly but surely starting to change,” a fresh study by the international magazine The Banker   reads.With 24 banks and 289 branches, the formal banking sector in Kyrgyzstan only reaches a small fraction of the country’s 5.72 million population. According to a World Bank report, a mere 4% of adults had a bank account in 2012, and the figure is unlikely to have risen dramatically in the past two years.However, Kyrgyzstan’s 600 or so microfinance institutions (MFIs) are more spread out geographically and are active competitors in the country’s loan markets. In 2010, MFIs had a total loan portfolio of Kgs9.9bn ($211m), according to the Association of Micro Finance Institutions in Kyrgyzstan.”


But since room for operations by microfinance firms is limited, some of them are considering transforming themselves into a bank, according to The Banker. “Finca, a microfinance business with operations in Kyrgyzstan since 1995, as well as in 21 other countries, has also applied for a banking licence,” the report reads. “Still, it is not expected that all microfinance providers can and will transform into banks. The majority of the 600 or so MFIs fall into categories of NGO-financed funds, pawn shops and other credit companies, and are therefore likely to continue to serve in their limited niche markets.”


Even though still embryonic in terms of market clout, figures within Kyrgyzstan’s banking sector are thought to look healthy enough to build in for near-future growtht “The business of banking in the Kyrgyzstan is a profitable one,” the report in The Banker observes. “In 2013, the average return on equity across the country’s 24 banks was 18%, according to data from the National Bank of the Kyrgyz Republic (NBKR). Kyrgyz Investment and Credit Bank, one of the country’s largest banks, with some $300m in assets, boasts a return on equity of about 18.5%. […] Kyrgyzstan has liberal bank legislation, including a relatively uncomplicated procedure for obtaining a banking licence, which also applies to international banks. UniCredit’s subsidiary, Optima Bank, along with KICB and Demir Kyrgy buz International Bank, represent about 40% of the banking sector’s $2.15bn of assets (as of the end of 2013), and are all majority foreign-owned banks. However, the three banks together only operate 36 branches across the country, according to data from the NBKR.”


Life has not always been that smooth. Under the previous regime led by President Kurmanbek Bakiyev, the latter’s family clan did its utmost, and to large extents successfully, to get the major banks in the country under its control – thereby all but ruining it in the process and leading to a vacuum after the regime’s downfall in 2010. Ever since, the sector had to reshape itself virtually from scratch, trying to win clients’ confidence back and building enough cash reserves to withstand eventual fresh setbacks.


“Apart from the low income base, retail clients are also a tough target because of the country’s history of banking crises and upheavals, which has led to an atmosphere of distrust in the banking sector,” the report reads further down. “In 2010, the then largest bank in Kyrgyzstan, Asia Universal Bank, was nationalised, declared insolvent and restructured, and several other banks and businesses had supervisory action taken against them. Across the Kyrgyz population, savings are often reinvested into immovable assets such as stock, cattle and other farming goods, or even kept in cash.”


This appears to open perspectives for banks to rehabilitate themselves in the eyes of the general public. “While there is no price war, the banking environment is competitive,” The Banker’s report notes. “Optima Bank advertises a ‘+1%’ campaign to lure deposits of individuals to its institution. The extra 1% of interest is offered to clients and new customers looking to open a deposit facility with the bank. To cover a wider area, Optima Bank has also introduced unmanned devices for automated bill payments, so-called ‘payment terminals’, which allow users to pay through national payment cards as well as international Visa cards.”


But the sting remains in the controversy between MFs and proper banks. Caught in the middle, Parliament is trying to create a clear legal distinction between the two rival sectors. The key to order in financial circles are, as usual, interest rates. “The microfinancing sector has attracted opposition against its business model,” The Banker notes in its report. “From 2012, lobbying against the sector and the high interest rates charged by some MFIs was on the increase, and this was followed by the introduction of a series of laws. One of the most significant was the law on limitation of usury activities, which applies to the whole financial sector. The law, introduced in September 2013, effectively sets a cap on the interest rates financial institutions can charge on loans. The cap is calculated by the NBKR on the basis of the weighted average nominal interest rate of loans provided by financial institutions plus 15%. But, according to the law, the cap is only intended to provide guidance. Still, the NBKR followed this up with recommendations to the sector to decrease interest rates. […] Such an interest rate cap can put pressure on the profitability of the financial sector as a whole, but especially on microfinance businesses. The 15% leeway, as added into the calculation of the cap, aims to consider the additional operational cost it represents to serve clients of the microfinance sector compared with large corporates. MFIs are already disadvantaged by relying only on the lending business, and by significantly higher borrowing costs compared with the banking sector. This makes the outlook for the microfinance sector less rosy than it was only a year ago. […] It would therefore not be surprising to see attempts by other larger players in Kyrgyzstan’s microfinancing market to move in the same direction.”

NoBank Addresse, Phone numberChairman of the bank (Head of the branch) Number of branches E–mail, Web-site
1OJSC “Commercial bank KYRGYZSTAN” 720033, Bishkek,
#54 a, Togolok Moldo str., ph: 61 33 33.
Nurdin Emilevich Ilebaev 35
2720017, Bishkek,
#101-101а, Shopokov str.,
ph: 333 000
720017, Bishkek,
#101-101а, Shopokov str.,
ph: 333 000
Kanat Mambetovich Mamakeev
3OJSC RK “AMANBANK” OJSC RK “AMANBANK” Nazira Asylbekovna Abirova
4“Optima Bank” OJSC 720070, Bishkek,
#493, Jibek Jolu str.,
ph: 374747
Beibut Sapargalievich Kapyshev 17
5OJSC Investbank “Issyk-Kul” 720021, Bishkek,
#133, Abdrahmanov str.,
ph: 622179
Djanaliev Bachtiyar Temirovich 6
6CJSB JSCB “Tolubay” 720010, Bishkek,
#105, Umetaliev str.,
ph. 392392
Aibek Meliskanovich Chekoshev
7OJSC “RSK Bank” 720040, Bishkek,
#38 a, Molodaya Gvardia boulevard, ph: 656746
Murzabekov Erkebai Rustamovich 51
8CJSC “BTA Bank” 720001, Bishkek,
#118, Moskovskaya st.,
ph: 905040
Murat Kerimjanovich Kunakunov
9CJSC “Demir Kyrgyz International Bank” 720001, Bishkek,
#245, Chui Avenue,
ph: 610610
Lutfullah Sevki Sarilar
10OJSC “DOS-KREDOBANK” 720011, Bishkek,
#81-83, Isanov str.,
ph: 692777
Myrzakunbek Samarbekovich Imanaliev
11CJSC “EcoIslamicBank” 720031, Bishkek,
#17, Geologicheski lane, ph: 543582, 543587
Nurbek Kadyrbekovich Kalenbaev
12CJSC “Bank of Asia” 720016, “Bishkek” FEZ, #303 Mira Avenue,
ph: 551182
Taalaibek Namasbekovich Djumataev 7Taalaibek Namasbekovich Djumataev
13OJSC “Kyrgyz Credit Bank” 720021, Bishkek,
#40/1, Ibraimov str. – #59/1 Bokonbayev str., ph.,389191
Sharshekeeva Kanysh Sharshekeevna
14OJSC “BAKAI BANK” 720001, Bishkek,
#77, Isanov str.,
ph: 610242
Aaly Bolotovich Umankulov
15OJSC “Halyk Bank Kyrgyzstan” 720033, Bishkek,
#390, Frunze str.,
ph: 614128
Kastoru Kasymbekovna Mamytova
16Bishkek branch of the National bank of Pakistan 720021, Bishkek,
#84, Moskovskaya str.,
Allah Ditta
17CJSC “Kyrgyz Investment and Credit Bank” 720040 Bishkek, #21, Erkindik boulevard,
ph: 620101
Kvang Yang Choi
18OJSC “FinanceCreditBank KAB” 720021, Bishkek, #105, Abdrahmanov str., ph: 303014, fax: 303499 Djorobekov Azamatbek Djolborsovich
19OJSC “Aiyl Bank” 720011, Bishkek,
#50, Pushkin str.,
ph: 665278
Erkin Shamshudinovich Asrandiev
20CJSC “Manas Bank” 720040, Bishkek, #14, Logvinenko str., ph: 902090 Djanybekova Sadat Emilbekovna
21OJSC “Capital Bank” 720017, Bishkek, #161, Moskovskaya str.,
ph: 313030
Ermek Kubanychbekovich
22OJSC “Rosinbank” 720040, Bishkek, #80/1, Moskovskaya str., ph: 313173 Sarbanov Ulan Kytaibekovich
23“Bai-Tushum” Bank CJSC 720001, Bishkek, #76,
Umetaliev str., ph:
900 464
Shamshieva Gulnara Zhamankulovna
24“KSB” CJSC 720001, Bishkek, #100, Turusbekov str., ph: 310763 Imanaliev Shamil Davutovich -

source: National Bank of Kyrgyzstan