Government allocates $3.2 billion to boost banking sector

Kazakh President Nursultan Nazarbayev recently signed a decree, effective immediately, allocating 1.1 trillion tenge (US$3.2 billion) to improve the nation’s banking sector.  The document was published on the portal of the information and legal system of normative legal acts Adilet.Over $3.1 billion to be allocated from the National Fund for improvement of the banking sector

Earlier, Deputy Chairman of the National Bank of Kazakhstan Oleg Smolyakov said the government will allocate 2 trillion tenge (US$6.3 billion) to purchase problem loans from banks.

On March 2, the government of Kazakhstan, the country’s National Bank, the Samruk Kazyna Sovereign Wealth Fund, the Problem Loan Fund, Qazkom Bank and its major shareholder Kenes Rakishev, Halyk Bank of Kazakhstan and BTA Bank signed a memorandum to ensure the financial stability and improvement of the banking sector, according to the National Bank, which stipulates, among other things, that Halyk Bank is set to buy out Qazkom’s shares.

“To effectively implement a potential transaction to purchase a stake in Qazkom, the government of Kazakhstan and the National Bank have an intention to provide financial support through the purchase of troubled assets by the Fund for Problem Loans,” the financial controller said.

However, Qazkom representatives specified that the signed document is not binding.

“The memorandum defines the scope and conditions under which a deal can be made, as well as the actions to be taken by each party to achieve this, including the terms of the potential transaction covering the possible risks associated with the loan of BTA Bank to Qazkom. The conclusion of the memorandum does not mean the execution of a transaction for which further actions of the parties and fulfilment of certain suspensive conditions specified in the memorandum are required,” Qazkom’s press service noted.

The joint-stock company “The Problem Loans Fund” was registered in the justice bodies on Jan. 11, 2012. The shareholder holding the common shares is the National Bank of Kazakhstan, the shareholder owning the preferred shares is the Committee of State Property and Privatisation of the Ministry of Finance of Kazakhstan.