THE RESOLUTION OF BOARD OF THE AGENCY OF THE REPUBLIC OF KAZAKHSTAN ON REGULATION AND SUPERVISION OF THE FINANCIAL MARKET AND THE FINANCIAL ORGANIZATIONS

of September 30, 2005 No. 358

About approval of the Instruction about normative values and technique of calculations of prudential standard rates for banks of the second level

According to the subitem 5) of Item 1 of article 9 of the Law of the Republic of Kazakhstan "About state regulation and supervision of the financial market and the financial organizations", Item 3 of article 42 of the Law of the Republic of Kazakhstan "About banks and banking activity in the Republic of Kazakhstan" the Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations (further - the Agency) DECIDES:

1. Approve the Instruction about normative values and technique of calculations of prudential standard rates for banks of the second level according to appendix 1 to this resolution.

2. Recognize invalid the regulatory legal acts of the Republic of Kazakhstan specified in appendix 2 to this resolution.

3. This resolution becomes effective after fourteen days from the date of state registration in the Ministry of Justice of the Republic of Kazakhstan, except for paragraph one of Item 3 regarding inclusion of the capital of the third level in equity, paragraphs of the fifth and sixth Item 13, of Item 14, of paragraphs of the seventh and eighth Item 16, of Items 17 - 31, the subitem 11) of Item 32 of the Instruction, lines 43 and 44 of Appendix 1 to the Instruction, Items 5 and 7 of the Explanation to Appendix 1 to the Instruction, the Explanation paragraph two to Appendix 2 to the Instruction which become effective since January 1, 2006.

4. To department of strategy and analysis (Edenbayev E. S.):

1) together with Legal department (Baysynov M. B.) to take measures to state registration in the Ministry of Justice of the Republic of Kazakhstan of this resolution;

2) in ten-day time from the date of state registration in the Ministry of Justice of the Republic of Kazakhstan to bring this resolution to the attention of the interested divisions of the Agency, banks of the second level, Consolidation of legal entities "Association of financiers of Kazakhstan".

5. To department of the international relations and public relations (Pernebayev T. Sh.) take measures to the publication of this resolution in mass media of the Republic of Kazakhstan.

6. To impose control of execution of this resolution on the vice-chairman of the Agency Bakhmutova E. L.

Appendix 1

to the Resolution of Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and financial the organizations of September 30, 2005 No. 358

The instruction about normative values and technique of calculations of prudential standard rates for banks of the second level

This Instruction about normative values and technique of calculations of prudential standard rates for banks of the second level (further - the Instruction) establishes normative values and technique of calculations of the prudential standard rates obligatory to observance of the second level by banks (further - banks). Normative values are expressed by number with three signs after comma.

Normative values and technique of calculations of prudential standard rates for banks and their affiliated organizations calculated on the basis of consolidated financial statements are established according to article 42 of the Law of the Republic of Kazakhstan of August 31, 1995 "About banks and banking activity in the Republic of Kazakhstan".

1. Minimum size of authorized and own capitals of bank

1. The minimum size of authorized and own capitals for again created bank is established in the amount of 10 000 000 000 (ten billion) tenges.

1-1. The minimum size of equity of bank is established in the following procedure:

for housing construction savings bank and bank which single shareholder is Central Bank of other state, in the amount of 4 000 000 000 (four billion) tenges;

for other banks in the amount of 10 000 000 000 (ten billion) tenges.

1-2. No. 222 is excluded according to the Resolution of Board of National Bank of the Republic of Kazakhstan of 19.12.2015

2. The bank redeems from shareholders own shares provided that such redemption will not lead to violation of any of prudential standard rates and other regulations, obligatory to observance, and limits set by authorized body on regulation, control and supervision of the financial market and the financial organizations (further - authorized body).

2. Coefficient of sufficiency of equity

3. The equity is calculated as capital sum of the first level and the capital of the second level minus positive difference between deposit amount of physical persons and equity according to the data of the balance sheet increased by 5,5.

For the purposes of calculation of the equity specified in part one of this Item:

the deposit amount of physical persons in foreign currency is calculated for the official rate of tenge to foreign currency established by National Bank of the Republic of Kazakhstan for January 1, 2016;

the positive difference between deposit amount of physical persons and equity according to data of the balance sheet joins in the following size:

since January 1, 2016 - 0 (zero) percent;

since February 1, 2016 - 20 (twenty) percent; since March 1, 2016 - 40 (forty) percent;

since April 1, 2016 - 60 (sixty) percent;

since May 1, 2016 - 80 (eighty) percent;

since June 1, 2016 - 100 (hundred) percent.

The requirements established by parts one and the second this Item do not extend to housing construction savings bank which equity is calculated as capital sum of the first level and the capital of the second level.

For the purposes of the Instruction, in addition to long-term credit rating evaluations of the Standard&Poor agency "s, authorized body are also recognized long-term credit rating evaluations of the Moody agencies" to s Investors Service and Fitch (further - other rating agencies).

For the purposes of the Instruction the following organizations treat international financial institutions:

Asian Development Bank (Asian Development Bank);

African development bank (African Development Bank);

Development bank of the European Council (Council of Europe Development Bank);

Eurasian Development Bank;

European Bank for Reconstruction and Development (European Bank for Reconstruction and Development);

European Investment Bank (European Investment Bank);

Islamic development bank (Islamic Development Bank);

Islamic corporation on private sector development (ICD);

Inter-American Development Bank (Inter-American Development Bank); International Development Association;

International Finance Corporation (International Finance Corporation);

International Bank for Reconstruction and Development (International Bank for Reconstruction and Development);

International Monetary Fund;

International Centre for Settlement of Investment Disputes;

Multilateral agency of guarantee of investments;

Scandinavian investment bank (Nordic Investment Bank).

3-1. Investments of bank when calculating equity for the purposes of item 4 of article 8 of the Law of the Republic of Kazakhstan of August 31, 1995 "About banks and banking activity in the Republic of Kazakhstan" represent investments of bank in subordinated debt of the legal entity which cumulative size exceeds ten percent of capital sum of the first level and the capital of the second level of bank.

4. The capital of the first level is calculated as the amount of fixed capital and the added capital:

1) fixed capital is calculated as the amount:

the paid common shares corresponding to criteria of the financial instruments of fixed capital provided by appendix 1-1 to this Instruction;

since January 1, 2018 the paid common shares issued by subsidiary banks belonging to minority shareholders (third parties);

supplementary paid-in capital;

retained net profit of last years;

retained net profit of the current year;

the cumulative opened reserve determined as the amount of remaining balance on the balance sheet accounts 3510 "Reserve capital" as of January 1, 2014 and 3400 "Dynamic reserves" of the Standard chart of accounts of financial accounting in banks of the second level, the mortgage organizations and Development Bank of Kazakhstan joint-stock company approved by the resolution of Board of National Bank of the Republic of Kazakhstan of January 31, 2011 No. 3 (further - the Standard chart of accounts) registered in the Register of state registration of regulatory legal acts at No. 6793;

reserves on revaluation of fixed assets and the cost of financial assets, available for sale;

minus the following regulatory adjustments:

own redeemed common shares;

intangible assets, including goodwill;

losses of last years and losses of the current year;

deferred tax asset minus deferred tax liabilities, except for parts of the deferred tax assets recognized concerning deductible temporary differences;

reserves on other revaluation;

the sales returns connected with transactions on securitization of assets. The deferred revenue in connection with the expectation of the complete or partial income in the future received from securitization conditions belongs to such income;

the income or losses from change of fair value of the financial liability in connection with change of credit risk according to such obligation;

the regulatory adjustments which are deductible from the added capital, but in connection with its insufficient level subtracted from fixed capital;

the investments specified in Item 4-1 of this Instruction;

2) the added capital joins the termless agreements corresponding to the criteria established in appendix 1-1 to this Instruction as a result of which at the same time there is financial asset at one person and the financial liability or other financial instrument confirming the right to share of the assets of the legal entity which remained later deductions of all its obligations at other person (further - termless financial instruments) and also the paid preferred shares corresponding to criteria the installed application 1-1 to this Instruction.

The size of the added capital decreases by the amount of the following regulatory adjustments:

investments of bank into own termless financial instruments by direct or indirect method;

own redeemed preferred shares of bank;

the investments specified in Item 4-1 of this Instruction;

the regulatory adjustments which are deductible from the capital of the second level, but in connection with its insufficient level subtracted from the added capital.

If the amount of the added capital of bank is insufficient for implementation of deduction, then the rest is subtracted from fixed capital of bank.

Investments of bank represent investments of bank in the share (shares in the authorized capital), termless financial instruments, and also subordinated debt of the legal entity.

4-1. The deduction of stock investment (share in the authorized capital), termless financial instruments, subordinated debt (further - financial instruments) banks from the capital of the first level is performed in the following procedure:

1) from fixed capital:

from January 1, 2015 to December 31, 2015:

the amount of the investments constituting less than 10 (ten) percent from issued shares of insurance company, in total exceeding 10 (ten) percent from fixed capital of bank;

the amount of the investments constituting 10 (ten) and more percent from issued shares of insurance company, in total exceeding 15 (fifteen) percent from fixed capital of bank;

since January 1, 2016:

investments of bank into financial instruments of legal entities which financial reporting are not consolidated in case of creation of the financial reporting of bank according to IFRS, according to the following conditions:

if investments of bank into financial instruments of the financial organizations in which the bank has less than 10 (ten) percent of issued shares (shares in the authorized capital) in total exceed 10 (ten) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the excess amount increased by share of investments into common shares in the total amount of investments is deductible from fixed capital;

if investments of bank into common shares of the financial organization in which the bank has 10 (ten) and more percent from issued shares (shares in the authorized capital) and also part of the deferred tax assets recognized concerning deductible temporary differences in total exceed 15 (fifteen) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the amount of excess is deductible from fixed capital.

Since January 1, 2018 the amount of the investments constituting 10 (ten) and more percent from issued shares (shares in the authorized capital) the legal entity, and the deferred tax assets recognized concerning deductible temporary differences does not exceed 15 (fifteen) percent from fixed capital of bank, after application of the regulatory adjustments specified in item 4 of this Instruction;

2) from the added capital:

if investments of bank into financial instruments of the financial organizations in which the bank has less than 10 (ten) percent of issued shares (shares in the authorized capital) in total exceed 10 (ten) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the excess amount increased by share of investments into termless financial instruments in the total amount of investments is deductible from the added capital;

investments of bank into termless financial instruments of the financial organizations in which the bank has 10 (ten) and more percent from issued shares (shares in the authorized capital) are deductible from the added capital.

If the amount of the added capital is insufficient for implementation of deduction, then the amount is subtracted from fixed capital of bank;

3) from the capital of the second level:

if investments of bank into financial instruments of the financial organizations in which the bank has less than 10 (ten) percent of issued shares (shares in the authorized capital) in total exceed 10 (ten) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the excess amount increased by share of investments into subordinated debt in the total amount of investments is deductible from the capital of the second level;

investments of bank into subordinated debt of the financial organizations, in which the bank has 10 (ten) and more percent from issued shares (shares in the authorized capital), of the legal entity, is deductible from the capital of the second level.

If the capital sum of the second level is insufficient for implementation of deduction, then the amount is subtracted from the capital of the first level of bank.

Investments, not deductible at the rate of equity, are weighed on degree of credit risk according to appendix 1 to this Instruction.

5. No. 97 is excluded according to the Resolution of Board of National Bank of the Republic of Kazakhstan of 27.05.2014

6. No. 97 is excluded according to the Resolution of Board of National Bank of the Republic of Kazakhstan of 27.05.2014

7. No. 97 is excluded according to the Resolution of Board of National Bank of the Republic of Kazakhstan of 27.05.2014

8. The termless financial instruments attracted till January 1, 2015, which are not corresponding to the criteria established in appendix 1-1 to the Instruction turn on in the added capital according to the following conditions:

since January 1, 2015 - in the amount of 100 (hundred) percent of the amount of termless financial instruments;

since January 1, 2016 - in the amount of 100 (hundred) percent of the amount of termless financial instruments;

since January 1, 2017 - in the amount of 80 (eighty) percent of the amount of termless financial instruments;

since January 1, 2018 - in the amount of 50 (fifty) percent of the amount of termless financial instruments;

since January 1, 2019 - in the amount of 20 (twenty) percent of the amount of termless financial instruments;

since January 1, 2020 the amount of termless financial instruments is excluded from calculation of the added capital.

Calculation of equity joins paid amount of termless financial instruments in the amount of the money which is actually received by bank.

8-1. The paid preferred shares of bank which are not corresponding to the criteria established in appendix 1-1 to the Instruction join in the added capital according to the following conditions:

since January 1, 2015 - in the amount of 100 (hundred) percent of the amount of the paid preferred shares;

since January 1, 2016 - in the amount of 100 (hundred) percent of the amount of the paid preferred shares;

since January 1, 2017 - in the amount of 80 (eighty) percent of the amount of the paid preferred shares;

since January 1, 2018 - in the amount of 50 (fifty) percent of the amount of the paid preferred shares;

since January 1, 2019 - in the amount of 20 (twenty) percent of the amount of the paid preferred shares;

since January 1, 2020 the amount of the paid preferred shares is excluded from calculation of the added capital.

Calculation of equity joins the amount of the paid preferred shares in the amount of the money which is actually received by bank.

9. Termless financial instruments turn on in calculation of equity of bank from the written confirmation of authorized body about compliance of the agreement or conditions of release of termless financial instruments of bank to the criteria established in appendix 1-1 to this Instruction.

For the purpose of the written confirmation of the authorized body provided by this Item copies by the approved authorized body of bank of the agreement or conditions of release of termless financial instruments are represented to authorized body.

10. The capital of the second level is calculated as the amount:

subordinated debt minus the redeemed own subordinated debt of bank;

minus the investments specified in Item 4-1 of the Instruction.

For the bank which is subject to restructuring according to the Law of the Republic of Kazakhstan of August 31, 1995 "About banks and banking activity in the Republic of Kazakhstan" the subordinated debt joins in the capital of the second level in the amount which is not exceeding 75 (seventy five) percent of capital sum of the first level minus the redeemed own subordinated debt of bank within five years from the date of the expiration of the carrying out restructuring determined by the judgment.

The size of the subordinated debt attracted till the January 1, 2015 which is not corresponding to the criteria established in appendix 1-1 to the Instruction joins in calculation of the capital of the second level according to the following conditions:

in national currency:

since January 1, 2015 - in the amount of 100 (hundred) percent of the amount of subordinated debt in national currency;

since January 1, 2016 - in the amount of 100 (hundred) percent of the amount of subordinated debt in national currency;

since January 1, 2017 - in the amount of 80 (eighty) percent of the amount of subordinated debt in national currency;

since January 1, 2018 - in the amount of 50 (fifty) percent of the amount of subordinated debt in national currency;

since January 1, 2019 - in the amount of 20 (twenty) percent of the amount of subordinated debt in national currency;

since January 1, 2020 the amount of subordinated debt in national currency is excluded from calculation of the capital of the second level;

in foreign currency:

since January 1, 2015 - in the amount of 80 (eighty) percent of the amount of subordinated debt in foreign currency;

since January 1, 2016 - in the amount of 60 (sixty) percent of the amount of subordinated debt in foreign currency;

since January 1, 2017 - in the amount of 40 (forty) percent of the amount of subordinated debt in foreign currency;

since January 1, 2018 - in the amount of 20 (twenty) percent of the amount of subordinated debt in foreign currency;

since January 1, 2019 the amount of subordinated debt in foreign currency is excluded from calculation of the capital of the second level.

The size of subordinated debt with repayment period as of the January 1, 2015 constituting less than 5 (five) years continues to join in calculation of the capital of the second level in the amount of, included as of December 31, 2014, and annually as of January 1 decreases by 20 (twenty) percent from the amount of subordinated debt.

10-1. Calculation of retained net profit (loss) of the current year or last years for the purposes of the capital of the first and second levels does not include the debit balance reflected in account 3300 "The account of adjustment of reserves (provisions)" (further - debit balance) the Standard chart of accounts as of December 31, 2012 in the following size:

in 2013 - 83,3 of percent of the amount of debit balance;

in 2014 - 66,6 of percent of the amount of debit balance;

in 2015 - 50 percent of the amount of debit balance;

in 2016 - 33,3 of percent of the amount of debit balance;

in 2017 - 16,6 of percent of the amount of debit balance.

11. The subordinated debt of bank is the unsecured obligation of bank corresponding to the criteria established in appendix 1-1 to this Instruction.

12. No. 97 is excluded according to the Resolution of Board of National Bank of the Republic of Kazakhstan of 27.05.2014

12-1. The banks performing (performed) restructuring according to the Law of the Republic of Kazakhstan of August 31, 1995 "About banks and banking activity in the Republic of Kazakhstan" can not include in calculation of equity negative difference between fair values of the financial instruments taking into account charged depreciation issued (acquired) within restructuring in the amount which is not exceeding 15 (fifteen) percent from the amount of the paid authorized capital minus own redeemed bank shares.

13. Sufficiency of equity of bank is characterized by the following coefficients:

1) coefficient of sufficiency of fixed capital (k 1):

relation of fixed capital to the amount:

assets, contingent and possible obligations weighed on degree of credit risk;

assets, conditional and possible requirements and obligations calculated taking into account market risk;

operational risk;

2) capital adequacy ratio of the first level (k1-2):

relation of the capital of the first level to the amount:

assets, contingent and possible obligations weighed on degree of credit risk;

assets, conditional and possible requirements and obligations calculated taking into account market risk;

operational risk;

3) coefficient of sufficiency of equity (k 2):

equity relation to the amount:

assets, contingent and possible obligations weighed on degree of credit risk;

assets, conditional and possible requirements and obligations calculated taking into account market risk;

operational risk.

The assets, contingent and possible obligations weighed on the risk degrees taken into consideration of coefficients of k 1, k1-2 and k2 join less the reserves created according to IFRS.

Values of capital adequacy ratios are determined as the amount of the values established by appendix 1-2 to the Instruction and the supervising allowance provided by the resolution of Board of National Bank of the Republic of Kazakhstan of July 17, 2015 No. 141 "About approval of Rules of application of measures of early reaction and technique of determination of the factors influencing deterioration in financial position of bank of the second level" registered in the Register of state registration of regulatory legal acts at No. 11987.

In addition to values of coefficients of sufficiency of equity the following values of buffers of equity are established:

the requirement to the conservation buffer is fulfilled on permanent basis and constitutes:

for all banks:

since January 1, 2015 – 1 (one) percent;

since January 1, 2016 – 1 (one) percent;

since January 1, 2017 – 2 (two) percent;

for systemically important banks:

since January 1, 2015 – 2,5 (two whole five tenth) percent;

since January 1, 2016 – 2,5 (two whole five tenth) percent;

since January 1, 2017 – 3 (three) percent;

which counter-cyclical buffer, the size and terms of introduction are established by authorized body at least in 12 (twelve) months prior to start date of calculation of the counter-cyclical buffer. The range of the size of the counter-cyclical buffer constitutes from 0 (zero) percent to 3 (three) percent from the amount of assets, contingent and possible obligations weighed taking into account risks;

the system buffer, the requirement to which calculation extends to the systemically important banks recognized as those according to the resolution of Board of National Bank of the Republic of Kazakhstan of December 24, 2014 No. 257 "About approval of Rules of reference of the financial organizations to number backbone" registered in the Register of state registration of regulatory legal acts at No. 10210. The requirement to the system buffer is fulfilled since January 1, 2017 on permanent basis and constitutes 1 (one) percent from the amount of assets, contingent and possible obligations weighed taking into account risks.

If the actual values of coefficients k 1, k1-2 and k2 are not lower, established in appendix 1-2 to this Instruction, but at the same time than any of the provided coefficients below what, the established values of coefficients taking into account equity buffers, then on use of retained net income of bank restriction according to appendix 1-3 to this Instruction, regarding the termination of dividend payout and the return share repurchase, except as specified, provided by the Law of the Republic of Kazakhstan of May 13, 2003 "About joint-stock companies" is imposed.

Values of coefficients of sufficiency of equity taking into account equity buffers, are reached at the expense of components of fixed capital which list is stipulated in Item the 4th this Instruction.

The size of buffers of equity calculated according to requirements of this Instruction is not reflected in financial accounting.

Values of standard rates of sufficiency of equity and buffers of equity are reviewed by authorized body at least once in three years.

14.  No. 97 is excluded according to the Resolution of Board of National Bank of the Republic of Kazakhstan of 27.05.2014

15.  No. 97 is excluded according to the Resolution of Board of National Bank of the Republic of Kazakhstan of 27.05.2014

15-1. It is excluded

16. Calculation of assets, the contingent and possible obligations weighed on degree of credit risk is carried out according to appendices 1 and 2 to this Instruction.

For the purposes of weighing of assets, contingent and possible obligations on risk degree assets, contingent and possible obligations decrease by the amount of the created reserves, according to international accounting standards.

The contingent and possible obligations weighed on degree of credit risk are determined as the work of the amount of the contingent and possible obligations calculated according to appendix 2 to this Instruction on the risk degree corresponding to category of the partner specified in appendix 1 to this Instruction on which the bank bears credit risks.

Swaps, futures, options, forwards join in calculation of the contingent and possible obligations weighed taking into account credit risk, by multiplication of the amount of market value of the specified financial instruments and credit risk on them on the risk degree corresponding to category of the partner specified in appendix 1 to this Instruction.

The credit risk on swap transactions, the future, the option and the forward is calculated as the work of nominal value of the specified financial instruments on the coefficient of credit risk specified in appendix 3 to this Instruction and determined by repayment period of the specified financial instruments.

Market value (replacement cost) of financial instruments specified in this Item represents:

according to transactions on purchase - the size of excess of the current market value of the financial instrument over the nominal contractual value of this financial instrument. If the current market value of the financial instrument is less or is equal to its nominal contractual value, the replacement cost is equal to zero;

according to transactions for sale - the size of excess of nominal contractual value of the financial instrument over the current market value of this financial instrument. If the nominal contractual value of the financial instrument is less or is equal to its current market value, the replacement cost is equal to zero.

The replacement cost is determined by dual currency financial instruments (financial instruments on which the requirement and the obligation are expressed in different foreign currencies) as the size of excess of tengovy equivalent of requirements over tengovy equivalent of the obligations determined by rate for date of creation of the reporting. If the size of tengovy equivalent of requirements is less or is equal to tengovy equivalent of obligations, the replacement cost is equal to zero.

The nominal contractual value of financial instruments specified in this Item represents the cost of financial instruments at which they are reflected for date of the conclusion of transactions in the corresponding accounts of financial accounting. That currency on which at bank requirements are created is accepted to the nominal contractual value of dual currency financial instruments.

The sold options do not join in calculation of the contingent and possible obligations weighed taking into account credit risk.

Calculation of assets, conditional and possible requirements and obligations taking into account market risk is carried out according to Items 17, of 18, of 19, of 20, of 21, of 22, of 23, of 24, of 25, of 26, of 27, of 28, of the 29 and 30 this Instruction.

Calculation of operational risk is carried out according to Item 31 of this Instruction.

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