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Eurasia
August 18, 2017 www.intellinews.com I Page 17
Kazakhstan might inject extra $3bn to recapitalise troubled banks
bne IntelliNews
The Kazakh central bank might recapitalise lo- cal banks by injecting between $1.8bn-3bn via a bond-purchasing programme to help the lenders write off bad loans, Olzhas Kizatov, head of the regulator's banking sector supervision depart- ment, told Reuters on August 10.
Kazakhstan’s banking sector – which has still not fully recovered from the 2008-9 financial crisis – has been hit by a rise in bad loans since the slump in world crude oil prices, which has depressed the entire Kazakh economy. It did not help that the authorities allowed the tenge to float in 2015, leading to a more than 40% depre- ciation of the national currency. Problem loans in 2016 amounted to 37% of total loans, according to Moody's Investors Service.
The bank will go ahead with its plans only if
shareholders also pitch in, according to the re- port. The amount will follow a KZT2.4tn (€6.1bn) bailout green-lighted for the country’s largest lender Kazkommertsbank, which was recently bought by the country’s second biggest lender Halyk Bank. The bond-buying programme would launch in September.
"We need to support banks' capital so they could actually write off problem loans," Kizatov said. "This is only possible through the creation of ad- ditional provisions."
The central bank has also estimated that the government will provide over KZT500bn to sup- port the Central Asian country’s banking system between August and September. The KZT500bn amount will likely at least partly cover KKB’s recapitalisation efforts.
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