The Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan has presented to the Mazhilis draft laws that would introduce a new framework for dealing with insolvent banks aligned with international practice. The proposals shift to a defined set of anti-crisis regimes that would be applied sequentially as a bank’s condition deteriorates, based on pre-set triggers intended to support timely and predictable supervisory intervention. The framework comprises three regimes: enhanced supervision, financial stability restoration, and resolution of an insolvent bank. Banks would be required to prepare recovery plans and resolution plans, with recovery plans covering comprehensive measures to exit crisis conditions and avoid insolvency, and both sets of plans to be updated annually. For systemically important banks, a requirement would be introduced to maintain sufficient loss-absorbing capacity to enable conversion of liabilities into capital in a failure scenario and reduce the need for external support. State support would be limited to systemically important banks as an exceptional measure and would take only one form: direct state entry into a bank’s capital, on a temporary and repayable basis and in the minimum necessary amount. Conditions attached would include replacing shareholders and management, banning dividends and bonuses, restricting risky operations, and implementing a financial recovery plan; after stability is restored, the bank would be sold to a new investor and public funds returned to the budget. The drafts also delineate responsibilities among public bodies, assigning the Agency oversight of recovery and resolution plan execution and application of crisis regimes, while the Financial Stability Council would play a coordinating role in decisions on resolution measures and state support.
Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan 2025-09-19
Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan presents draft banking law introducing three-stage crisis regimes and new recovery and resolution requirements
Kazakhstan's Financial Market Agency proposed draft laws to the Mazhilis for managing insolvent banks, aligning with international standards. The framework includes enhanced supervision, financial stability restoration, and resolution, requiring banks to update recovery and resolution plans annually. State support is limited to systemically important banks, involving temporary state capital entry with strict conditions, and the Agency oversees plan execution and crisis regime application.