RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN

of July 17, 2015 No. 142

About approval of Rules of application of measures of early reaction and technique of determination of the factors influencing deterioration in financial position of banking conglomerate

According to the Law of the Republic of Kazakhstan of August 31, 1995 "About banks and banking activity in the Republic of Kazakhstan" the Board of National Bank of the Republic of Kazakhstan DECIDES:

1. Approve the enclosed Rules of application of measures of early reaction and technique of determination of the factors influencing deterioration in financial position of banking conglomerate.

2. Declare invalid the resolution of Board of National Bank of the Republic of Kazakhstan of February 24, 2012 No. 73 "About approval of Rules of application of measures of early reaction and technique of determination of the factors influencing the deterioration in financial position of banking conglomerate" (registered in the Register of state registration of regulatory legal acts at No. 7563, published on June 11, 2012 in the Kazakhstanskaya Pravda newspaper No. 220-221 (27039-27040)).

3. To department of methodology of control and supervision (Abdrakhmanov N. A.) in the procedure established by the legislation to provide:

1) together with Legal support department (Dosmukhambetov N. M.) state registration of this resolution in the Ministry of Justice of the Republic of Kazakhstan;

2) the direction of this resolution on official publication in information system of law of Ad_let of the republican state company on the right of economic maintaining "The republican center of legal information of the Ministry of Justice of the Republic of Kazakhstan" within ten calendar days after its state registration in the Ministry of Justice of the Republic of Kazakhstan;

3) placement of this resolution on official Internet resource of National Bank of the Republic of Kazakhstan after its official publication.

4. To department of the international relations and public relations (Kazybayev A. K.) provide the direction of this resolution on official publication in periodic printing editions within ten calendar days after its state registration in the Ministry of Justice of the Republic of Kazakhstan.

5. To impose control of execution of this resolution on the vice-chairman of National Bank of the Republic of Kazakhstan Kozhakhmetov K. B.

6. This resolution becomes effective from the date of its first official publication.

Approved by the Resolution of Board of National Bank of the Republic of Kazakhstan of July 17, 2015 No. 142

Rules of application of measures of early reaction and technique of determination of the factors influencing deterioration in financial position of banking conglomerate

1. These rules of application of measures of early reaction and technique of determination of the factors influencing deterioration in financial position of banking conglomerate (further - Rules), are developed according to the Law of the Republic of Kazakhstan of August 31, 1995 "About banks and banking activity in the Republic of Kazakhstan" (further - the Law on banks) and establish procedure for application of measures of early reaction and technique of determination of the factors influencing deterioration in financial position of banking conglomerate.

In case of identification of the factors influencing deterioration in financial position of banking conglomerate, authorized body on regulation, control and supervision of the financial market and the financial organizations (further - authorized body) applies to bank holding and (or) its large participants of measure of early reaction.

2. For the purpose of ensuring financial stability of banking conglomerate and non-admission of deterioration in its financial position the authorized body performs the analysis of activities of banking conglomerate for identification of the factors influencing deterioration in financial position of banking conglomerate, stipulated in Item 3 Rules.

Requirements of Rules do not extend to nonresidents of the Republic of Kazakhstan, being the bank holding, person having signs of bank holding and to conforming requirements of Item 7 of article 45 of the Law on banks.

3. The factors influencing deterioration in financial position of banking conglomerate are:

1) decrease in coefficients of sufficiency of equity of banking conglomerate;

2) increase in coefficients of the maximum extent of risk at one borrower of banking conglomerate;

3) application of measures of early reaction concerning the financial organizations, being members of banking conglomerate;

4) increase in the amount of requirements of members of banking conglomerate to each other according to intra group transactions between members of banking conglomerate (except for investments of members of banking conglomerate into the capital of other participants, transactions with the affiliated organization acquiring doubtful and bad assets of parent bank, the transactions closed on reporting date).

4. In case of identification of the factors specified in Item 3 of Rules in analysis result of financial position of banking conglomerate and (or) following the results of check of bank holding or members of banking conglomerate the authorized body sends to bank holding and (or) its large participants the requirement for submission of the actions plan providing measures of early reaction for increase in financial stability of banking conglomerate, non-admission of deterioration in its financial position and increase in the risks connected with activities of banking conglomerate (further - the actions plan).

5. Bank holding and (or) its large participants in time no more than five working days from the date of receipt of the requirement of authorized body develop and represent the actions plan which contains to authorized body:

1) the detailed analysis of the factor influencing deterioration in financial position of banking conglomerate;

2) forecast of this factor, reasons for this forecast and negative impacts on activities of banking conglomerate;

3) measures for improvement of this factor, that is bringing to the level which is not posing threat (additional risks) for activities of banking conglomerate;

4) completion dates of the actions plan (with indication of completion dates on each Item of the actions plan);

5) officials responsible for execution of the actions plan.

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