Kazakhstan restricts crisis bailouts to three systemically important banks
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Kazakhstan will restrict government bailouts during a financial crisis to just three systemically important banks, the Agency for Regulation and Development of Financial Market (ARRFR) announced Wednesday. The remaining 20 lenders will no longer receive state aid, with any assistance funded solely from the national budget. The list of eligible banks remains undisclosed, even as the regulator emphasized the banking system is currently stable.
The New Bailout Framework
ARRFR deputy chair Olzhas Kizatov stated that only three systemically important banks will be eligible for state support during a crisis, a sharp reduction from the previous blanket approach. The identity of the three banks is not disclosed; the National Bank determines the list based on market share in lending, deposits, and payment services. This policy marks a fundamental shift in how Kazakhstan will handle banking sector distress.
Funding Restrictions
Any government assistance will be provided solely through direct capital injections from the republican budget. Kizatov confirmed that the use of National Bank reserves, the National Fund, and quasi-state company resources is explicitly prohibited. This centralizes fiscal risk and shields other public institutions from banking sector liabilities.
Loss-Sharing Mechanism
If the government incurs losses from rescuing a failing major bank, it can compel other banks to cover the costs, but only up to 0.2% of their liabilities. First Deputy Chair Timur Abilkasymov said these payments would be triggered only after a crisis and actual government losses, with no upfront contributions or collective funds currently in place.
What's Next
The ARRFR is set to gain new powers to intervene directly in bank operations, though a timeline has not been specified. Whether these measures, combined with the narrowed bailout scope, will deter risk-taking or amplify market stress if a crisis hits remains an open question.
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Kazakhstan restricts crisis bailouts to three systemically important banks
