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Standard & Poor`s on tenfold obligatory increase in Kazakhstan-based banks’ capital net worth

09 september 2014, 10:14
0
Photo courtesy of top68.ru
Photo courtesy of top68.ru

The tenfold obligatory increase of Kazakhstan-based banks’ capital net worth will not be a clear-cut solution to ensure strengthening of the entire banking sector, according to the Standard & Poor`s (S&P) rating agency as quoted by Newskaz.ru.

In a recent statement, S&P reminds that the latest measures announced by the country’s banking regulator include tenfold obligatory increase in the banks’ net worth up to $546.2 million starting from January 1, 2019. As of July 1, 2014, 33 out of 38 Kazakhstan-based banks are short of the standard to be introduced.

According to the agency, the requirement to significantly augment the capital net worth may result in a number of M&A in the banking sector, with some minor players leaving the market.

“We believe that regardless of the new requirements, the major negative factors affecting the banking sector remain the same. These include insufficiently tough regulation and supervision, (…) risk management practices of most of the banks and not always effective corporate governance procedures”, Ms. Yekaterina Marushkevish of Standard & Poor`s said.

According to her, excessively high barriers to entrants may decrease the sector’s attractiveness for investors.

S&P estimates, the regulator’s initiatives will not have any significant impact on the banks’ ratings in the nearest two years as the agency takes into account the ratio between the banks’ capital net worth and respective high risk assets, rather than the absolute capital net worth figure.
 


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