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02:13 25-11-2017
АКИpress CA-News Tazabek Turmush
Kazakhstan's Central Bank plans $3 bln bond-buying scheme to ease debt crisis
Central Asia | business | 09:52, 11 August 2017 | 982

AKIPRESS.COM - Kazakhstan's central bank plans to inject 0.6-1.0 trillion tenge ($1.8-3.0 billion) into local banks through a bond-purchasing programme to help them write off bad loans, provided shareholders pitch in too, Reuters said with reference to an official.

The central bank will invest twice the amount provided by a lender's shareholders in purchasing banks' subordinated bonds, said Olzhas Kizatov, head of its banking sector supervision department.

"We need to support banks' capital so they could actually write off problem loans," he said. "This is only possible through the creation of additional provisions."

According to official data, Kazakh banks' combined bad loans stand at 11 percent of their total assets.

"In reality, we understand that this figure is higher," Kizatov said.

The bond-buying programme will be launched in September, he said. It follows a 2.4 trillion tenge ($7.2 billion) bailout of the Central Asian nation's biggest lender by assets, Kazkommertsbank, last month.

The former Soviet republic has struggled to recover from the 2008/09 global financial crisis and its banking sector has been beset more recently by bad loans since the sharp slide in the price of oil, Kazakhstan's main export.

Banks with capital of at least 45 billion tenge ($135 million) - or 16 out of Kazakhstan's 33 lenders - will be eligible for funding under the 15-year programme.

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