Eternity Law International News Bank formation in Kazakhstan

Bank formation in Kazakhstan

Published:
June 7, 2021

Bank formation in Kazakhstan

Bank formation in Kazakhstan has a two-tiered banking system.  The first tier is comprised of the National Bank of Kazakhstan (NBK), which reports to the president. The second tier includes 28 commercial banks, including one state-owned bank and 14 banks 30% or more of which are held by foreigners, 12 of which are subsidiaries of foreign banks. In addition to its monetary policy responsibilities, the National Bank performs the functions of a financial regulator. In that role, the NBK is charged with overall supervision of the banking sector, insurance, pension system, stock market, microcredit organizations, debt collection agencies, and credit bureaus. In May 2019, the NBK proposed changes to legislation providing for establishment of a new independent regulatory body that would take charge of financial markets control and development, as well as consumer rights protection, while the NBK will concentrate on monetary policy and inflation control.  The function split should eliminate conflict of interests within the NBK, improve financial market regulation and prevent malpractices.

Although prohibited from creating retail banking branches in Kazakhstan until 2020, foreign banks may establish subsidiaries, joint ventures, and representative offices.  As of April 2019, 20 foreign banks had representative offices in Kazakhstan.  The legislation mandates equal treatment for foreign and Kazakhstani investors, a position reinforced in 2005 by legislative amendments that lifted restrictions on the participation of foreign capital in the banking sector.  Notably, no individual may own more than 10% of a bank’s shares (unless that bank is a subsidiary of another bank) without permission from the National Bank.

Governmental policy regarding the banking in Kazakhstan:

Foreign individuals and companies can open bank accounts in local banks as soon they present identification documents and confirmation of local registration, including taxpayer registration.

According to the IMF’s April 2019 Regional Economic Outlook for Central Asia and September 2018 Staff Report, the banking sector remains saddled with weak underwriting and reporting standards, poor payment culture, a related party, and directed lending, the opacity of ownership, and reliance on state support.  Legacy non-performing loans (NPLs) from the 2007-2008 global financial crisis and Kazakhstan’s real estate market collapse continue to hinder banks’ profitability and their ability to extend credit.  From 2013-2016, the drop in oil prices precipitated a 40% currency depreciation and economic slowdown that further weakened the banking sector, which was overexposed to domestic dollar lending.

In response to these crises, the government facilitated several rounds of bank bailouts to ensure stability and facilitate the sector’s consolidation, with mixed results.

Banking sector recovery remains a top priority for the government, and the NBK has adopted policies to strengthen oversight and capital requirements, de-dollarize, resolve bad assets, and encourage consolidation NBK policies have somewhat improved the situation and helped to preserve banking sector stability.  For example, the share of NPLs dropped from 31% in January 2014 to .6% in April 2019(although analysts believe the figure has always been much higher with restructured loans and interest gaps included).  However, the sector has yet to fully recover and the NBK has more work to do to clean it up. The regulator introduces the risk-based supervision approach in 2019 and performs an AQR which should help assess banks’ capital adequacy and establish follow-up measures.

The bank formation of banking institution in Kazakhstan consists of few stages, such as:

1) The registration process of the joint-stock company (for a bank in Kazakhstan it is required to have the particular legal form of the entity – joint-stock company).

2) Collection and preparing of the required documentation to apply to NBK, submitting of the documents to the NBK.

3) Approval process of the UBO of the bank and obtaining of the approval to establish a banking institution from NBK.

4) Issuance of the banking license.

Contact us if you wish to establish your banking institution in Kazakhstan. We have a team of professional lawyers who have substantial experience in the corporate, banking, compliance, and other branches of law who can establish your banking institution as soon as possible.

You could be interested

Registration of a company in Poland

Poland has been a favorable market for foreign businesspersons who appreciate the country’s openness, geographic location, and well-educated and highly skilled employment market.  Accordingly, company registration in Poland is an excellent option to discover many commercial opportunities and take advantage of both low labor costs and attractive corporate taxation rates. Below is a brief overview of the...

The tax system in Croatia

To run a business in Croatia, each entrepreneur should know exactly what system of taxation is valid in the country and how it works. Thus, this article helps you understand the types of taxes that operate in Croatia and how it works in the frameworks of commercial activity. So it ought to be noted that...

Company registration Delaware

Registration fee EUR 870.00 Company renewal cost EUR 790.00 Number of directors 1 Corporate tax 0.00% Paid Authorized Capital 0.00 Reporting requirements no General information about the company in Delaware Company type – Limited Liability Company (LLC); The time frame for company registration – 2 to 3 days; The Delaware Secretary of State is the...

SPI license in Sweden

Financial activities in Sweden require mandatory licensing. One of the two types of licenses intended for organizations with a monthly turnover of up to 3 million euros is the SPI. This business license is issued by the Finansinspektionen in Sweden. Our team offers highly qualified professional assistance in establishing and licensing companies around the world....

Forex Broker License in Cayman Islands

Over past few years, Cayman Islands maintained status as one of most popular offshore spaces in terms of a reliable basis for running financial structures. This is reason why Forex broker license in Cayman Islands is an opportunity to declare oneself as a profitable structure and take advantage of all the privileges that a recognized...

SEMI license in Estonia

The Estonia small electronic money issuer license allows you to create a payment system and is issued on the basis of a written application given to the Estonian Financial Inspectorate. General information about small electronic money issuer license in Estonia  Fintech is a rapidly growing industry that attracts more and more entrepreneurs every day. At...
Fill the blank:

Zurich

Dreikonigstrasse, 31A, Stockerhof

Kyiv

Baseina street, 7

London

Grosvenor Gardens, 52

Washington

1629 K St. Suite 300 N.W.

Vilnius

Gediminas Avenue, 44A

Tallinn

Kesklinna linnaosa, Tuukri 19

Edinburgh

Lochrin Square, 1

Nicosia

Jacovides Tower, 5 floor

Riga

Esplanade, 7 floor

Hong Kong

18 Harbour Road, 35/F, Central Plaza, Wanchai

Singapore

Level 42, Suntec Tower Three, 8 Temasek Boulevard

Sydney

20 Martin Place

Porto

2609 Avenida da Boavista

Tbilisi

Revaz Tabukashvili Str., N 45, area N 7