The Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan published an article by Deputy Chair Dauren Salimbayev setting out the case for reforming Kazakhstan’s framework for dealing with failing banks and describing a draft Banks law that would align the regime more closely with international resolution standards. The proposed shift is toward predefined crisis stages, mandatory recovery and resolution planning, and greater reliance on loss allocation to shareholders and investors rather than open-ended public support. The article argues that the current approach has lacked clear differentiation between systemically important and other banks, relied on ad hoc decision-making without predefined criteria and sequencing, and has not fully developed market-based procedures for asset transfers and loss allocation or a transparent framework for state involvement. Under the draft model, banks would move through three anti-crisis regimes based on predefined triggers: enhanced supervision, restoration of financial stability, and resolution of an insolvent bank. Recovery plans and resolution plans would become mandatory, with recovery plans updated annually, and systemically important banks would face an additional requirement to maintain sufficient loss-absorbing capacity (TLAC). State involvement would be retained only as a last resort, limited to systemically important banks and only after equity is exhausted and liability conversion mechanisms are applied, taking the form of a direct state capital entry decided by the Financial Stability Council and subject to strict limits and conditions including changes in ownership and management, bans on dividends and bonuses, restrictions on risky operations, and mandatory implementation of a recovery plan. Once stability is restored, the bank would have to be sold to a new investor with proceeds returning to the budget, and any residual shortfall would be covered by the banking sector rather than taxpayers; earlier crisis tools such as buying problem assets at nominal value, issuing concessional subordinated bonds, and budget-funded special credits would be removed. The draft would also clarify institutional roles, assigning the Government and the National Bank defined responsibilities for resolving systemically important banks, giving the Agency oversight of recovery and resolution plans and application of crisis regimes across banks, and positioning the Financial Stability Council as the coordinator and decision-maker on resolution measures and state participation.

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