Kazakhstan’s largest bank has swallowed up its biggest rival in a $560m deal that policymakers hope will stabilise the country’s fragile banking sector.

Halyk Bank, owned by Timur Kulibayev and his wife Dinara, daughter of the country’s strongman president Nursultan Nazarbayev, announced on Wednesday it had paid 185bn tenge ($560m) for 96.8 per cent of the shares in Kazkommertsbank, the country’s second-largest lender.

The takeover will give Halyk control of around 37 per cent of the country’s banking market, almost four times more than its next challenger.

Officials hope the long-mooted deal will be the first of a slew of mergers to strengthen the sector through consolidation and provide much-needed support to balance sheets saddled with bad loans. Dozens of Kazakh lenders are struggling with non-performing loans that stem from the 2008 financial crisis and the fallout from the 2014 collapse in oil prices.

Central Asia’s wobbly banks have been put under the spotlight in recent months after the default and ongoing restructuring of International Bank of Azerbaijan, that country’s largest lender, which sparked fears of a wider domino effect across the region.

The purchase took place on Wednesday, Halyk said in a statement.

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