Kazakhstan’s Eurasian Bank suffered significant financial losses while attempting to enter the Uzbekistan market. The project to create a subsidiary organization proved too costly and was ultimately shut down.
What happened
According to the financial statements published on the Kazakhstan Stock Exchange (KASE), Eurasian Bank’s attempt to launch a subsidiary structure in the neighboring country resulted in major expenses. According to unofficial data, during the preparation stage, this project bore the working title Untitled Bank.
Country and market
Kazakhstan and Uzbekistan. The expansion of Kazakhstan players into the Uzbekistan market in recent years seems a logical step due to the huge audience and rapid growth of cashless payments. However, launching from scratch requires not only obtaining a license from the Central Bank of Uzbekistan but also the readiness to compete with already established local fintechs and banks.
Why it matters
Entering a new market is always associated with “burning” capital at the start: IT infrastructure, hiring a team, marketing, and meeting regulator standards are expensive. The main signal here is that the Uzbekistan market no longer forgives easy launches: in addition to the critically high cost of entry, there are hidden regional pitfalls that severely hinder the scaling of foreign players.
What’s next
The project to create a subsidiary bank in Uzbekistan has been halted. Now Eurasian Bank will have to record the losses from the unsuccessful attempt at foreign expansion and focus on developing its business in the domestic market.