06 марта 2013 14:21

Central Bank Governor believes it’s time local banks turned to external borrowing

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The current money market conditions and significant decrease in the banking system’s external debts are favorable for banks to start borrowing from the international capital markets, Newskaz.ru reports, citing the country’s Central Bank Governor Gregory Marchenko as saying at a press conference March 6 He reminded that the banking sector’s debt reached its peak back in 2007 making up $47 billion, whereas today the figure stands at $10.6 billion. “Interest rates found in the global markets are quite low at the moment; the issue of the banking sector’s foreign debt has been partially solved. Some banks can easily turn to international capital markets and secure loans at reasonable rates to finance the country’s real sector”, he believes. He reminded that Eurasian Development Bank (co-owned by Kazakhstan and Russia) and Development Bank of Kazakhstan had raised funds for a 10-year period at the APR of 4.3-4.7% in 2012 through issuing debt securities. Mr. Marchenko emphasized that external borrowing shouldn’t be the main source of funds for Kazakhstan’s banks as it was back in 2005-2007. “The National Bank doesn’t say there should be substantial amounts borrowed abroad (…) but if the interest rates are reasonable, banks could turn to external markets. They haven’t been borrowing from abroad for years. It’s time to resume the practice”, he said. He stressed that in the mid run banks could rely on tenge-denominated bonds to be issued domestically. According to him, such instruments could be in demand, including on part of the anticipated single pension fund.


The current money market conditions and significant decrease in the banking system’s external debts are favorable for banks to start borrowing from the international capital markets, Newskaz.ru reports, citing the country’s Central Bank Governor Gregory Marchenko as saying at a press conference March 6 He reminded that the banking sector’s debt reached its peak back in 2007 making up $47 billion, whereas today the figure stands at $10.6 billion. “Interest rates found in the global markets are quite low at the moment; the issue of the banking sector’s foreign debt has been partially solved. Some banks can easily turn to international capital markets and secure loans at reasonable rates to finance the country’s real sector”, he believes. He reminded that Eurasian Development Bank (co-owned by Kazakhstan and Russia) and Development Bank of Kazakhstan had raised funds for a 10-year period at the APR of 4.3-4.7% in 2012 through issuing debt securities. Mr. Marchenko emphasized that external borrowing shouldn’t be the main source of funds for Kazakhstan’s banks as it was back in 2005-2007. “The National Bank doesn’t say there should be substantial amounts borrowed abroad (…) but if the interest rates are reasonable, banks could turn to external markets. They haven’t been borrowing from abroad for years. It’s time to resume the practice”, he said. He stressed that in the mid run banks could rely on tenge-denominated bonds to be issued domestically. According to him, such instruments could be in demand, including on part of the anticipated single pension fund.
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