This was not always the case. In fact, the picture was quite different just a decade ago, when these three countries accounted for only 53% of assets. The expansion of the fastest-growing banking sectors has been spectacular. In the case of Kazakhstan, the oil and gas boom drove liquidity into the banking sector, which was then augmented by a borrowing binge on international bond markets that peaked in early 2007. Assets grew 32 times over from 2000 to 2007, with both assets and capital more than doubling in 2006 alone. By 2007, the top four banks in the CIS were all from Kazakhstan, as were six of the top 10.
The bubble burst before the height of the global financial crisis, with the Kazakh real estate market crashing in 2007. As a result, while many emerging market banking sectors were relatively resilient until 2009, $4.35bn in Tier 1 capital was wiped off the Kazakh banking sector in 2008.
Meanwhile, Belarus has achieved a steady rise without the benefit of vast oil and gas reserves. Gradual economic liberalisation and the entry of foreign capital into the banking sector helped the country to almost double its share of total assets in 10 years, to 15% of the CIS regional total. There are seven foreign-owned banks in Belarus in the latest ranking, out of 11. This compares to just one foreign-owned bank out of the four Belarusians that featured in our rankings in 2000.
The story in Ukraine has been somewhere in between these two trajectories. Bank capital and assets also grew spectacularly, with foreign capital again playing a major role. Of the 22 Ukrainian banks now in our rankings, 12 are foreign-owned, accounting for 32% of total Tier 1 capital. This has altered the effects of the financial crisis, because foreign parents have recapitalised where necessary in the face of heavy losses in 2009. Consequently, Tier 1 capital continued rising in 2009, in stark contrast to the situation in Kazakhstan.
