The Republic of Kazakhstan: Financial System Stability Assessment
IMF Staff Country Reports, August 29, 2014
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- The Republic of Kazakhstan: Financial System Stability Assessment
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Bibliographic details
- Published: August 29, 2014
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498311007.002
Executive summary and main findings
- The global financial crisis exposed serious bank vulnerabilities in Kazakhstan.
- The authorities successfully contained the ensuing systemic crisis, however, left unaddressed important weaknesses that continue to linger.
- The government has nationalized three of the largest banks and restructured their external obligations, thus preventing a collapse of the banking system.
- The banks’ solvency situation is adequate but somewhat fragile as a result of legacy problems.
- A faster transition to risk-based oversight is needed.
- The relative vulnerability of banks to shocks warrants increased emphasis on risk.
- This can be achieved through the adoption of more advanced risk-assessment tools and a more extensive use of stress test results for risk analysis.
Financial safety net and resolution framework
- The financial safety net and resolution framework were upgraded during the crisis but need further adjustments.
- The government amended the resolution framework in 2009 to incorporate several desirable features such as restructuring, purchase and assumption, and bridge bank.
- However, during the crisis it bypassed the use of sequential crisis management tools and nationalized banks and restructured their external liabilities.
- The resolution framework suffers from the absence of special authority and requires the approval of depositors and creditors.
- Adjustments to the Emergency Liquidity Assistance framework are needed to limit its availability to solvent institutions.
Policy recommendations (implied by assessment)
- Accelerate the transition to risk-based supervisory oversight.
- Adopt more advanced risk-assessment tools within supervisory practice.
- Make more extensive use of stress test results for routine risk analysis and supervisory decision-making.
- Amend the resolution framework to include appropriate special authority and reduce dependence on depositor and creditor approval where legally warranted.
- Restrict Emergency Liquidity Assistance to solvent institutions through clearer eligibility criteria and operational safeguards.
Subject coverage and keywords
- Subject: Banking, Capital adequacy requirements, Commercial banks, Credit, Expenditure, Financial institutions, Financial regulation and supervision, Loans, Money, Nonperforming loans, Pension spending
- Keywords: a number of bank, A. bank regulation, bank secrecy law, banking system, bridge bank option, Capital adequacy requirements, coverage ratio, CR, Credit, credit risk, exchange rate, financial system, foreign currency, foreign exchange, Global, ICAAP report, ISCR, Loans, Nonperforming loans, Pension spending