The Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan has prepared legislative amendments, embedded in a new draft law on banks and banking activity, to restructure how insolvent and problem banks are handled. The proposals aim to limit the use of state support to exceptional cases and to manage failing banks in a way that minimises negative spillovers to the financial system. The draft framework introduces a three-stage approach: enhanced supervision, a financial stability recovery regime, and a resolution regime. Early signs of deterioration would trigger tighter supervisory control and updates to banks’ recovery plans, while further deterioration would activate the recovery regime with scope for additional measures; once a bank is declared insolvent, it would move to resolution, including appointment of a temporary administration and an assessment of viability. The amendments also envisage obligations for banks to develop and update recovery plans, for the regulator to create and update resolution plans for insolvent banks, and for systemically important banks to hold total loss-absorbing capacity (TLAC) to help reduce reliance on public funds.
Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan 2025-04-14
Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan proposes a three-stage insolvent bank resolution framework and TLAC for systemic banks
Kazakhstan's Financial Market Agency proposed legislative amendments in a draft law on banks to restructure handling insolvent banks. The framework introduces enhanced supervision, a financial stability recovery regime, and a resolution regime to limit state support and minimize financial system spillovers. It mandates banks update recovery plans and requires systemically important banks to hold total loss-absorbing capacity (TLAC).