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Kazakhstan’s Central Bank Eyes Restructuring Options for Troubled Banks
The National Bank of Kazakhstan (NBRK) is considering various options to revamp struggling banks in the country. In a recent announcement, the central bank outlined its plans and proposals for selling off troubled assets, merging with other entities, or making significant changes to their operations and management.
Large Participant Requirements
The NBRK has introduced new regulations governing large participants in Kazakhstan’s banking sector. A “large participant” is defined as an individual or entity that owns 10% or more of a bank’s voting shares or has the ability to exert influence over its decision-making process.
Denial of Large Participant Status
Applications for large participant status can be denied on several grounds, including:
- Failure to comply with regulatory requirements
- Unstable financial condition
- Breach of antitrust laws
- Ties to offshore zones
- Failing to meet other requirements set forth in the law
Indicators of Unstable Financial Condition
The central bank has identified several indicators that suggest a company’s financial stability is at risk, including:
- A company founded less than two years prior to its application date
- Liabilities exceeding assets
- Losses recorded in the past two fiscal years
- High levels of liabilities posing a significant risk to the bank’s financial condition
- Past due and off-balance sheet liabilities payable to a bank
Enforcement Measures
If an applicant fails to secure large participant status, the NBRK may take enforcement measures against them under Article 47-1 of the law.
Bank Holding Companies
A “bank holding company” is defined as any entity that owns 25% or more of a bank’s voting shares or has the ability to exert influence over its decision-making process. The process for obtaining a bank holding company position follows the same procedures as for large participant status.
Joint Bank Holding Companies
The NBRK has also introduced regulations governing “joint bank holding companies,” which refers to entities that, in concert, own or have the power to vote 25% or more of a bank’s shares and jointly influence its decision-making process.
Conclusion
The central bank’s efforts aim to strengthen the country’s banking sector and prevent potential risks to financial stability. The proposed regulations are expected to enhance transparency and accountability among large participants in Kazakhstan’s banking industry.