Public Money Could Be Used to Rescue Failing Kazakh Banks
Photo: Orda.kz
Kazakhstan will allow the government or a state holding company to buy shares in a systemically important bank facing collapse, Orda.kz reports.
The National Bank and the Agency for Regulation and Development of the Financial Market have approved the procedure, which takes effect on September 6.
The regulator must first begin financial rehabilitation and determine whether state support is necessary. The Financial Stability Council will then assess the rescue plan, risks to the financial system and possible alternatives.
If approved, shares may be purchased using the national budget, other state funds or government guarantees. A national holding will handle smaller purchases, while the government will acquire larger stakes.
The authorities must report quarterly on the money spent. Once the bank stabilizes, the state must sell its shares to an investor.
The rules complement an earlier bank-resolution mechanism allowing regulators to replace owners and transfer assets and deposits to another bank. Customers’ deposits cannot be used to cover losses.
Original author: Alexander Zhdanov
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