Publication: Financial Sector Assessment : Republic of Kazakhstan
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Date
2009-06
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2009-06
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Abstract
The Kazakhstan financial sector remains dominated by domestic commercial banks. The banking sector is largely domestically owned, private, and relatively concentrated, with the largest five banks accounting for 78 percent of total banking assets. The share of foreign banks has increased to about 15 percent of total banking assets after some recent acquisitions. The stress testing included single factor sensibility and scenario analysis and focused on the potential impacts of the two main risks being faced by the banking system, liquidity and credit risks. The exercise looked into the potential impact of: (i) the ongoing liquidity crunch and worsening external funding conditions; and (ii) asset and collateral quality deterioration, particularly for construction, real estate, and consumer lending. Some progress has been achieved in strengthening the prudential framework and improving bank governance. However, there is a need to move towards risk-based supervision with more attention to banks' use of risk management systems and internal controls, strengthen the capacity to implement effective consolidated and cross-border supervision, build up stress testing capacity, improve the approach to asset classification and valuation, and develop liquidity risk monitoring capacity. The financial sector assessment (FSA) has taken a more proactive approach in dealing with banks under stress but staff turnover and capacity building issues hinder efforts. The 2004 mission recommendation to increase focus on liquidity risk of individual institutions has not been implemented effectively and, as a result, reliance on wholesale funding continues to pose risks.
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“World Bank. 2009. Financial Sector Assessment : Republic of Kazakhstan. © World Bank. http://hdl.handle.net/10986/3058 License: CC BY 3.0 IGO.”
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