Eurasian Bank, BCC and NurBank are top borrowers from government in Kazakhstan
According to the data of the Agency for regulation and development of financial market, Kazakhstan’s six banks including Jusan bank, Bank RBK, Halyk bank, Bank Center Credit, Eurasian Bank and NurBank owe the government 1.7 trillion tenge as of April 2024, Kazinform News Agency correspondent reports.
Funds provided under the government support are being returned by the banks in line with the terms of the agreements signed, reads the response of the Agency for regulation and development of financial market to an official inquiry of Kazinform News Agency.
As the Agency said, the government support shall be deemed liabilities of a bank for deposits, bonds, loans, placed, obtained or provided to the bank with the use of funds from the government budget, the National Fund and the National Bank or its subsidiaries, including through the quasi-sector subjects to ensure financial stability and rehabilitation of the bank.
Starting from January 1, 2023, the banks received the government support are not allowed to pay dividends to their shareholders from revenues obtained with the help of the government support as well as in case they have negative capital. Because of that, Halyk Bank and Bank RBK partially returned funds provided under the government support in the amount of 81.3 billion tenge in 2023 (68.4 or 12.9bn tenge, respectively).
Besides, Eurasian Bank, Bank Center Credit and NurBank are part of the bank sector financial stability enhancement program, prohibiting them to pay dividends unless they exit the program.
After joining the program, banks shall recapitalize the bank by their shareholders through either cash injections in the authorized capital or accumulation of undistributed net profit; increase the transparency of the shareholder structure (identification of final beneficiaries); shall not recapitalize the bank at the expense of borrowed funds; shall limit payment of non-fixed rewards (bonuses) to senior workers; restrict payment of dividends to shareholders of the bank on common shares; and limit lending high-risk loans in line with the criteria defined by the Agency.
In case the bank fails to fulfill its obligations, the Agency for regulation and development of financial market is free to adopt supervisory response measures or convert bonds into common shares, making the state the largest single shareholder of the bank.
Supervisory response measures include orders on elimination of infringements, fine (in case of failure to eliminate) and deprivation of the license.
