February 28, 2020 / 9:42 AM / a month ago

UPDATE 2-Four Kazakh banks enter asset protection scheme - regulator

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ALMATY, Feb 28 (Reuters) - Four Kazakh banks are increasing their capital and entering a five-year, $308 million asset protection scheme with the state following an asset quality review, the Kazakh financial regulator said on Friday.

The lenders, Bank CenterCredit, ATF Bank , Eurasian Bank and Nurbank, will pay premiums to the government for insuring their assets, the regulator said, adding they were already adequately capitalised.

Nurbank will also sell capital-boosting subordinated bonds to a state fund under an assistance programme which the three other banks have already utilised, Oleg Smolyakov, deputy chairman of the regulatory agency, told a briefing.

The measures under which banks will pay 3% of the insured assets’ value every year and face restrictions such as a bar on dividend payments and an executive pay cap will ensure banking system stability and improve risk management, he said.

The protection scheme covering up to 117 billion tenge ($308 million) in bank assets borrows from the experience of other countries such as Britain which used it as a part of a bank bailout package in 2009, according to Smolyakov.

Kazakh banks’ asset quality declined after sharp drops in the price of oil, the Central Asian nation’s main export, in 2009 and 2015, triggered devaluations of the local tenge currency and caused a collapse in property prices. (Reporting by Olzhas Auyezov; editing by David Evans)

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