ALMATY/Feb. 28 2020 (The Bulletin) — Four Kazakh banks have entered a government scheme that protects them from bankruptcy after a Central Bank asset review test, the Kazakh Central Bank said in a statement.
The move comes at the end of the government’s review of assets held by 14 second-tier banks. This will concern analysts who have said that Kazakhstan’s banking sector is still too weak and that the banks’ asset-to-loan proportion is still too low.
The banks — Bank CenterCredit, ATF Bank, Eurasian Bank and Nurbank — are now protected from bankruptcy but will have to pay a premium for the insurance.
Although the banks have been taken into a government protection scheme, the Oleg Smolyakov, deputy chairman of the Kazakh Central Bank, said they were all adequately capitalised as they passed a minimum threshold of a capital adequacy ratio of 7.5%.
“We are confident that, based on the implementation of recommendations and measures, a further increase in the financial stability of the banking sector as a whole will be achieved,” he was quoted by the media as saying.
In December, sources had described the four banks as needing a bailout to survive after the asset review showed up holes in their balance sheets. Media reported that the asset protection scheme for the four banks would last five years and be worth $308m.
In the 2008/9 Global Economic Crisis, the government had to buy up three private banks. They were hit again after the 2014 collapse of oil prices.
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— This story was first published in issue 438 of the Central Asia & South Caucasus Bulletin
— Copyright the Central Asia & South Caucasus Bulletin 2020