Kazakhstan approves state purchase of failing systemic banks from Sept 6
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Kazakhstan's government and national holding will be able to buy shares in failing systemically important banks with state funds starting September 6. The National Bank and the Agency for Regulation and Development of the Financial Market (ARDFM) approved the intervention procedure. The move follows earlier rules allowing the ARDFM to write down liabilities and transfer deposits of troubled banks.
Key Facts
- From September 6, the government or a national holding may buy shares in systemically important banks facing collapse using state funds.
- The National Bank and the ARDFM approved the procedure for such intervention.
- If the stake costs no more than 10% of the national holding's equity, the holding will buy the shares; otherwise the government will be the buyer.
- Responsible organizations must report quarterly on spending and the condition of the acquired stake.
- After the bank stabilizes, the state must sell the shares to a new investor.
Intervention Procedure
For each problem bank, authorities will prepare a separate plan. First, the ARDFM will launch a financial recovery procedure, then decide whether the bank needs state money. The Financial Stability Council will assess the bank's condition, its rescue plan, and possible consequences for the financial system. The Council will also determine whether other measures are sufficient and whether the National Bank can issue an emergency loan.
State Purchase Terms
If the Council supports state participation, the government will determine how many shares to buy, at what price, and from which source to take the money. Authorities may use the republican budget, other state funds, and guarantees. If the stake costs no more than 10% of the national holding's equity, the holding will buy the shares. If the amount is higher, the government will be the buyer.
Reporting and Exit
Responsible organizations will report quarterly on spending and the condition of the acquired stake. After the bank stabilizes, the state must sell the shares to a new investor. The new document supplements an earlier mechanism allowing the ARDFM to write off part of a problem bank's liabilities, change its owners without their consent, and transfer deposits and working assets to a more stable organization. Citizens' deposits cannot be used to cover losses.
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Kazakhstan approves state purchase of failing systemic banks from Sept 6
