Kazakhstan intends to alter the legislation to loosen the restrictions for establishing foreign banks in order to attract reputable foreign financial organizations and promote competition in the banking sector. Madina Abylkassymova, the Chairperson of the Agency for Regulation and Development of the Financial Market, made the announcement during a plenary session of the Majilis of the Parliament, Kazinform News Agency reports.
She noted that Kassym-Jomart Tokayev called for creating conditions to attract foreign banks that can improve competition and service quality in the banking market in his last year’s Address to the People of Kazakhstan. Kazakhstan's present law allows foreign investors to enter the banking sector from 2020, since joining the WTO. The suggested changes aim to streamline and minimize bureaucratic impediments.
One of the main changes will be a reduction in the list of documents required to obtain permission to open a foreign bank. “The number of documents will depend on the rating of the foreign parent company. Thus, for foreign banks with a rating from “BB-” to “A-”, the number of documents required to open a subsidiary bank is reduced from 24 to 17, and for opening a branch – from 20 to 10. For banks with a rating of “A-” and higher, the number of documents is reduced to 10 and 8, respectively. The bill also reduces the requirements for the assets of a foreign bank when creating branches, from 20 billion to 10 billion US dollars to attract more foreign investors,” the Head of the Agency stated.
The bill also provides for an expansion of the list of permitted activities for branches of foreign banks. Now they will be able to carry out exchange transactions with foreign currency, conduct custodial activities, act as a transfer agent, participate in syndicated financing, and issue payment cards.
"At the second stage, after receiving permission to open a subsidiary bank or a branch of a foreign bank, the list of documents for obtaining a banking license is also reduced from 50 to 7. Basically, these documents relate to internal regulatory documents and the requirements for their approval will be transferred to the stage after receiving the license," Madina Abylkassymova said.
The measure simplifies the criteria for executives of foreign banks: now, experience in microfinance companies will be considered while appointing to executive roles; the need for management experience for board of directors has also been dropped.
