BAKU, Azerbaijan, Dec. 3
By Nargiz Sadikhova – Trend:
The banking system of Kazakhstan is currently absorbing losses associated with the restructuring of loans, with refinancing and granting deferrals for repayment of loans, mainly due to the accumulated capital stock, the Agency of Kazakhstan for the Regulation and Development of the Financial Market told Trend.
According to the agency, in the context of the continuing economic crisis, a second package of temporary measures of prudential regulation of a countercyclical and supportive nature was developed and adopted, which will be aimed at maintaining the potential of the banking sector to lend to the economy.
“To maintain further lending to the economy, reduce the burden on equity capital and liquidity of banks, a prudential regulation mechanism was used. The agency adopted temporary regulatory easing in order to free up capital and liquidity of banks, which made it possible to stimulate financing of the economy,” the agency said.
“In turn, in order to absorb additional losses of banks caused by the crisis, as well as to maintain the volume of lending to the economy, the requirements for equity capital were reduced by reducing the conservation buffer by 1 pp,” said the agency.
“Requirements for equity capital were reduced, including for loans issued to SMEs, requirements for liquidity ratios were softened, which made it possible to free up capital of banks in the amount of 468 billion tenge ($1.1 billion) and liquidity in the amount of 1.8 billion tenge ($4.2 million). In general, the measures taken made it possible to maintain the volume of bank lending to the economy,” the agency said.
“In order to stimulate banks to finance and support SMEs, the risk weight on guarantees and sureties issued in favor of SMEs to secure their obligations to third parties has been reduced,” the agency noted.
“To reduce pressure on banks' liquidity, the requirements for the liquidity coverage ratio (LCR) were temporarily relaxed by reducing the minimum allowable value from 0.8 to 0.6 and revising the amount of cash outflow due to obligations to the Government, NBRK, international financial organizations, local executive bodies,” the agency said.
The agency added that to support the potential of the banking sector to finance the economy and prevent a decrease in the volume of available stable funding, the deadline for the introduction of a rule that toughens the calculation of the available stable funding ratio was postponed.
“Moreover, the list of types of restructuring has been expanded that will be excluded from the loan impairment criteria. In particular, along with the restructuring associated with the deferred payments in the period from March 16 to June 15, 2020, any restructuring of loans associated with the financial difficulties of the borrower provided to reliable borrowers (if the borrower has no delay in payments on the loan for more than 30 days and the fact that restructuring related to the financial difficulties of the borrower in the last year before the introduction of the PE) will not be recognized as a loan impairment event,” said the agency.
“In order to stimulate provision by banks of 90-day deferrals of payments on loans to households and SMEs, the indicators of early response measures for the growth of overdue debt have been temporarily changed. The growth of arrears over 180 days will be used as indicators of early response measures,” the agency stressed.
