National Bank calls for proper identification of risks in agrarian bank establishment

A balanced decision is needed in the issue of agrarian bank establishment in Kazakhstan, according to Vitaly Tutushkin, Deputy Governor of the Naitonal Bank of Kazakhstan, Kazinform News Agency reports.

In his words, the proposals for the establishment of a specialized agrarian bank are put forward occasionally.

He reminded of  several public and private institutions in Kazakhstan which financed primarily agricultural sector, like KazAgroPromBank, which announced bankruptcy in 2000, and KazAgro with negative fiscal results.

Delta Bank and Tsesna Bank also had a negative experience, despite they had a high share of agricultural projects in the credit portfolios, he added.

For this reason, we need a balanced decision on another attempt of creation of the agrarian bank. The functioning of such an institute is quite possible, given that potential risks are identified and a proper strategy for their management is chosen. The future shareholder must be ready to bear the costs associated with the bank’s operation, Tutushkin said at a roundtable devoted to the issues of agricultural sector financing held at the Majilis.

In his words, it is likely that the Government of Kazakhstan or quasi-state sector will be the shareholder of the bank.

In general, as the National Bank, we do not mind the creation of the agrarian bank, if a decision is taken. We need to properly determine the risks associated with the bank’s operation and choose a right strategy for management of these risks, he noted.