World Monitor Magazine, №1/2020 WM_March 2020_FOR WEB (12.03.) | Page 24

DESTINATION KAZAKHSTAN
Regulation and development
of the financial market
Since January 1, 2020, a new financial regulator has been operating in
Kazakhstan, which is directly subordinate and accountable to the Head
of State, the Agency of the Republic of Kazakhstan for Regulation and
Development of the Financial Market.
The decree to reorganize the National
Bank of Kazakhstan by spinning off an
agency “On Further Improving the Public
Administration System of the Republic of
Kazakhstan” was signed by the President
of Kazakhstan, Kassym-Zhomart Tokayev,
on November 11, 2019 and entered into
force on January 1, 2020.
Oleg Smolyakov,
First Deputy Chairman
of the Agency of the
Republic of Kazakhstan
on Regulation and
Development of the
Financial Market
The main tasks and mission of the
Agency are to regulate and develop the
financial market, promote the stability
of the financial market and financial
organizations, maintain confidence in
the financial system as a whole and
create equal conditions for the activities
of financial organizations aimed at
maintaining fair competition in the
financial market, ensuring an appropriate
level protecting the rights and legitimate
interests of consumers.
The Agency carries out regulatory,
supervisory functions, specifically, state
regulation, control and supervision
of the financial market and financial
organizations (with the exception of legal
entities operating exclusively through
exchange offices under the license of the
National Bank).
In 2019, based on the methodology of the
European Central Bank, an assessment
of the banking sector’s quality of assets
(AQR) was carried out as a measure of
increasing confidence and stability in
the financial sector. Fourteen banks
took part, which accounted for 87% of
the total banking assets and 90% of the
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world monitor
total loan portfolio. There is no capital
shortage for those participating in the
AQR at the system level or the individual
bank level; equity capital adequacy
ratios significantly exceed regulatory
minimums.
Based on the AQR results, by the
end of March 2020, the approval of
corrective measures for each of the 14
banks will be completed and micro and
macroprudential supervision measures
will be applied.
The Agency will ensure that these
measures are monitored and enforced.
There will be activities to improve risk –
oriented supervision in 2020, which was
introduced as practice for the regulator in
2019, and the SREP (Supervisory Review
and Evaluation Process) methodology
that takes into account the results
assessing the quality of bank assets.
The risk-based approach methodology
incorporates the principles of the
European Banking Authority (EBA) on
the process of banking supervision and
SREP assessment. SREP provides an
evaluation of the banks’ performance
by the viability of their business models,
the quality of the risk management
system, corporate governance, as well as
traditional metrics of capital adequacy,
liquidity and funding sustainability.
Evaluation of these elements allows
you to identify negative changes in the
financial condition of banks earlier and