Kazakhstan’s Agency for Regulation and Development of the Financial Market (ARDFM) aims to tighten oversight of banking conglomerates. The proposed changes will primarily affect the capital adequacy ratio, which has been applied only to commercial banks until now, according to a statement from the ARDFM’s press office.
A banking conglomerate is a group of companies under one ultimate owner. This group typically includes banks and other financial institutions, such as insurance companies and brokerage firms. The goal of these mergers is to offer a broad range of financial services within a unified structure.
Between 2023 and 2024, the ARDFM has been working on regulations to introduce prudential requirements at the consolidated level.
«The prudential requirements for conglomerate capital involve calculating a capital adequacy ratio based on the consolidated capital of the conglomerate, minus investments,» the ARDFM stated in its release.
The capital adequacy ratio is a key indicator that measures a bank’s ability to cover its risks with equity capital. It is calculated as the ratio of equity capital to assets, adjusted based on the risk level of each asset. For banking conglomerates, the minimum required ratio is «at a level exceeding 1.»
Starting in 2024, Kazakhstan requires banks to maintain a fixed capital adequacy ratio of 8% and an equity capital adequacy ratio of 10.5%. For systemic banks, these thresholds are slightly higher — 9.5% and 12%, respectively.
The adoption of these regulations is scheduled for December 2024, with implementation planned for 2025.
Additionally, the agency has developed rules for establishing risk management frameworks, corporate governance structures and internal control systems for banking conglomerates.
