Kazakhstan to develop strategies to ensure financial stability in banking sector

Finance Materials 20 January 2021 21:02 (UTC +04:00)

BAKU, Azerbaijan, Jan. 20

By Nargiz Sadikhova - Trend:

The main task of Kazakhstan’s National Bank and the Agency for Regulation and Development of the Financial Market is to ensure financial stability amid the global crisis caused by the COVID-19 pandemic, a source in the agency told Trend.

According to the source, for the above purpose, an asset quality review (AQR) in the banking sector was completed and a holistic, objective understanding of the current situation in the financial market achieved.

"Following the results of the AQR on April 30 of this year, the agency, in compliance with the best international practice, agreed on supervisory plans for corrective measures of 14 banks, which will help significantly transform the key business processes of banks (on average, there are 2,500 corrective measures per bank)," said the source.

To assess the depth of the impact of the crisis associated with the spread of the pandemic on the stability of the banking sector, the agency, together with the National Bank, for the first time carried out a full-scale supervisory stress testing of 14 banks participating in the AQR, using the ‘top-down’ method based on a new model developed according to the European Central Bank’s methodology.

"Based on the results of the banking sector's stress testing, the key risks for its stability were identified," the source emphasized.

To eliminate the identified risks and prevent their emergence in the future, banks will develop a strategy for ensuring the financial stability of banks, envisioning measures to increase the ability of the banks' business models to generate sustainable long-term income and also measures to improve the efficiency of work with distressed assets, added the source.