Kazakhstan plans to ease requirements for registration of foreign banks and their branches

ALMATY. March 5 (Interfax) - Kazakhstan's Agency for Regulation and Development of the Financial Market and National Bank will propose a bill to ease requirements for registration of foreign banks and their branches in the republic, the Agency said in a Tuesday press release.

"In order to attract to the republic foreign banks that have high credit ratings, the Agency, together with the National Bank, will propose a draft law easing the existing requirements for the registration of foreign banks or their branches. The new law will reduce the number of necessary documents and will ease the regulatory requirements for branches of non-resident banks in Kazakhstan," the press release said following a meeting between the Agency head Madina Abylkasymova and the top managers of the second-tier banks operating in Kazakhstan.

According to the press release, the Agency will continue in 2024 to encourage banks to use their liquidity for lending to the real sector. This year, the Agency will also start preparations for the introduction of climate stress testing for the second-tier banks, focusing on assessment of banks' sustainability and potential financial losses when implementing programs for global transition to a low-carbon economy.

"Furthermore, the Agency will keep introducing the Basel principles, which will include tougher regulation of bank groups on a consolidated basis and improvement of lending mechanisms for last-resort loans taking into account AQR procedures," the press release says.

Starting from 2024, the Agency will apply regulatory capital allowances based on the results of supervisory review and evaluation process (SREP), asset quality review (AQR) and stress testing.

In the summer of 2023, the Agency proposed that financial institutions should be allowed to open retail deposits during the first year of their operation. The ban to open such deposits was introduced in 2008, when there was a high risk that banks would not be able to repay deposits to their clients. Today, this ban has become an administrative barrier, for all second-tier banks now participate in the Kazakhstan Deposit Insurance Fund.