The Republic of Kazakhstan has recently announced the adoption of certain measures designed to “further strengthen the capitalization and liquidity of the Kazakhstan banking sector.” These measures are supported by the National Bank of Kazakhstan and Kazakhstan’s Financial Supervision Agency.
In response to a decline “in the quality of banking assets,” and a decrease in market liquidity, the Kazakhstan government has adopted measures to inject capital into its domestic banking institutions that “will take the form of common and preferred shares for up to $5 billion. The right to subscribe to common and preferred stock will be offered initially to existing shareholders in view of them providing sufficient capital to sustain financial stability of these banking institutions. To the extent the existing shareholders forego the opportunity to inject adequate capital into the banks the Government stands ready to become the shareholder of banks. The Government does not intend to own or control a majority of the share capital of any bank.”
Last week, Kazakhstan announced that it had reached a “principal agreement” with the majority shareholders of Halyk Bank, Kazkommertsbank, and JSC Alliance Bank. Under this agreement, the government committed to provide additional capital to the financial institutions through a National Wealth Fund “acting on behalf of the Government.”
Karim Massimov, Prime Minister of Kazakhstan, noted that the government could expect to inject an additional US $15 billion into the national economy before year end.