The National Bank committee chairman Kuat Kozhakhmetov has announced that the supervisor believes the amount of doubtful loans which will be withdrawn from commercial banks to special financial companies is estimated at 900 billion tenge.
With the introduction of the Fund of Distressed Assets, the banks of Kazakhstan will clear the balance for 6.2 billion US dollars. In this case, the amount of free provisions of commercial banks will equal 7%, which will produce a favourable impact on the capital database and conditions of further lending. According to different assessments, to date every 3rd or 5th loan given by the bank are inactive.

Michael Eggleton, Business Expert
«So, I think to summarize, you know, from my perspective the trends are very positive but still there will be a long time before we have normalized the banking sector. I think it could be more than one year. I think it will be a few years. But the trend is correct and the measures that have been taken have been strong. You know, and now we all need to take this responsibility among ourselves, these bankers, you know to normalize and to ensure that we do.»

The head of the National Bank Grigory Marchenko said that the bank proposed two schemes of clearing the balance of commercial banks. The first scheme involves loans connected with real estate. It is planned to withdraw these loans from the balances of the bank to special companies. Afterwards, experts of companies will be working with the search for purchasers of these assets. The second scheme falls to loans with an equipment and financial guarantee.

Michael Eggleton, Business Expert
«And then with regards to these bad debts, to these distressed assets, the fund is a wonderful idea and it is something that I think is very important to secure the entire banking sector to be cleaned up and to remove some of these very bad assets that have been on the balance sheets for a long time. But you know, we’ll see how this progresses because there are still a number of issues on the regulatory side, on the tax issues that result from the legislation and what needs to be fixed as well. And who will manage this and how will you deal with all these issues in the courts, etc? These practical issues, these regulatory, these tax issues that all need to be put together to sort this out.»

Currently, the free liquidity of the commercial banks of Kazakhstan exceeds 1.5 trillion tenge.