State-guaranteed deposits at Kazakhstani banks undergoing resolution with support from shareholders and, where applicable, the government will remain fully protected, according to Dauren Salimbayev, deputy chairman of the Agency for Regulation and Development of the Financial Market (ARDFM).
Salimbayev outlined the country’s proposed framework for resolving insolvent banks during a briefing on the new bank resolution mechanism.
“One of the key priorities of the new model is ensuring the continuity of customer service, even during a bank resolution,” he said. “Regardless of the resolution tool used — whether the transfer of assets and liabilities, the creation of a bridge bank, or a bail-in mechanism — guaranteed retail deposits will be fully protected.”
He added that the legislation explicitly prohibits using individuals’ deposits, as well as obligations related to salaries, taxes and social security contributions, to absorb a bank’s losses.
According to Salimbayev, bank recoveries will instead be financed through the bank’s capital, shareholders, investors and other legally prescribed sources rather than customers’ funds.
Banking services to continue during resolution
Salimbayev said the new framework is designed to ensure uninterrupted access to essential banking services throughout the resolution process.
“Even after the resolution regime is introduced, payments, money transfers, account servicing and other transactions necessary for the normal activities of individuals and businesses will continue,” he said.
He said the primary objective of the new framework is not only to resolve a troubled bank but also to preserve customers’ access to their funds and critical banking services.
Three-stage early intervention model
According to Salimbayev, Kazakhstan’s new bank resolution framework was developed in line with international standards established by the Basel Committee on Banking Supervision and the International Monetary Fund.
He said the reform is intended to shift the country’s approach from responding to banking crises after they occur to identifying and addressing problems at an early stage.
The framework establishes three stages of supervisory intervention:
- The first stage begins when early signs of financial deterioration emerge, triggering enhanced supervision and monitoring.
- The second is the recovery stage, during which the bank implements a pre-prepared recovery plan with the support of its shareholders.
- The third applies when recovery is no longer feasible, allowing authorities to use special resolution tools to preserve the bank’s critical functions while safeguarding financial stability.
According to Salimbayev, similar resolution frameworks are used in the U.K., the U.S., the European Union, Canada, Switzerland, Mexico and many other jurisdictions that have adopted international standards developed by the Financial Stability Board.
Higher loss-absorbing capital requirements
A key feature of the new framework is advance preparation by both banks and regulators for potential financial distress. Salimbayev said this reduces the risk of a disorderly bank failure and helps ensure an orderly resolution process.
One of the core requirements is for banks to maintain Total Loss-Absorbing Capacity (TLAC), a capital buffer designed to absorb losses using the bank’s own resources.
Under the proposal, the minimum TLAC requirement will be set at 13% of risk-weighted assets beginning in 2027 and will gradually increase to 18% by 2032.
State support becomes a last resort
The new resolution framework also changes the government’s role in rescuing troubled banks.
Whereas state support could previously serve as one of the primary rescue mechanisms, it would now be available only as a measure of last resort and exclusively for systemically important banks.
