What UniCredit got fundamentally wrong about Bulat Utemuratov’s ATFBank

To under­stand the one of the biggest bank­ing cat­a­stro­phes in the his­to­ry of Italy we need to dive in the real­i­ty of the days it was pre­ced­ing it. The future looked bright in the ear­ly 2000’s. Money sup­ply was indef­i­nite and nation­al economies were bub­bling with all sorts of bub­bles. Nobody cared. The lib­er­tar­i­an approach to the mar­ket dom­i­nat­ed eco­nom­ics. The com­mon denom­i­na­tor of pol­i­tics was a free mar­ket wor­ship­ping. Dotcom was long for­got­ten and real estate cri­sis was years ahead. UniCredit was one of the most ambi­tious play­ers on the mar­ket. The craved for more and more ter­ri­to­ry under their com­mand and more and more branch­es opened. Dіrеttоrе Еdіtоrіаlе has the their own sto­ry of the infa­mous Bulat Utemuratov’s ATFBank acqui­si­tion by UniCredit Group.

UniCredit Group used a proven strat­e­gy for expan­sion. In each coun­tries they select­ed one local bank. The cri­te­ria was sim­ple: the pre­ferred banks with a big net­work of branch­es, retail-ori­ent­ed and just a reg­u­lar type do-it-all type of banks. Never the biggest, nev­er the small­est. ‚In Ukraine they bought CreditSoc bank, in Russia it was International Moscow Bank, in Romania it was a series of more com­plex merg­ers. UniCredit have seen ‘the poten­tial’ far beyond European bound­aries. Kazakhstan seemed to be just OK for the goal.

It was not OK and still isn’t now. Corrupted author­i­tar­i­an oli­garchy formed on the ash­es of the local com­mu­nist par­ty is not exact­ly the best friends of the open busi­ness. But UniCredit lead­er­ship was blind­ed by per­spec­tives and gen­er­al prospects of Kazakhstan as a oil, gas, ura­ni­um, cop­per, zinc and rare met­al exporter. Downplaying the risks asso­ci­at­ed with the Nazarbaev’s regime is fun­da­men­tal flaw num­ber 1.

Bulat Utemuratov sold ATF to Unicredit and made a tunnel for Nazarbaev clan 

ATFBank, the bank the UniCredit choose to buy, was the fun­da­men­tal mis­take num­ber two. It was owned by Bulat Utemuratov, a high rank­ing offi­cial and clos­est ally of the pres­i­dent Nursultan Nazarbaev. On a sur­face ATFBank was made to pre­tend to be a major all-pur­pose bank. But real­ly it was feed­ing on the Bulat Utemuratov and oth­er oli­garchs spe­cial tal­ents. It was the bank used for export oper­a­tions. To be pre­cise – high­ly cor­rupt­ed oper­a­tions of export­ing oil, ore and nat­ur­al gas, machin­ery and met­als out of the coun­try with­out return­ing prof­its to the very state of Kazakhstan.

The third fatal flaw of the UniCredit plan to con­quer the Great Steppe is the covert own­er of ATFBank him­self. Bulat Utemuratov in those days had enjoyed the pow­er next to the absolute. He was president’s clos­est proxy. One word would be enough to put a pres­sure on UniCredit. Court sys­tem which is flawed and cor­rupt­ed will not help at all.

But UniCredit made all these mis­takes: the group entered Kazakhstan, the acquired flawed ATFBank and they acquired it from Bulat Utemuratov. It was more than enough to loose 2.1 bil­lion (paid for the bank), 1.2 bil­lion (writ­ten off cred­its), unknown amount of oper­a­tional costs. Only 700 mil­lions returned back after dis­graced UniCredit sold it back to the local oli­garchs in 2013.

Original arti­cle: Talk Finance