Kazakhstan Parliament approved government repurchase of bad assets

/REUTERS, Astana, Raushan Nurshaeva, Editor - Ann Smirnova, October 22, 08/ - Kazakhstan Parliament approved a pocket of financial amendments, determining also the mechanism of government repurchase of bad assets. Global liquidity crisis injured financial system of Kazakhstan, which banks aggressively borrowed abroad for business development. The Prime Minister Karim Masimov hurried deputies to adopt these amendments, but hoped that there will be no need in its practical appliance. Government or state managing holding may enter the bad bank "at single violation of adequacy of shareholders equity coefficient and (or) liquidity coefficient, or other violation of prudential standards and (or) other mandatory standards and limits twice or more times during 12 successive calendar months" is said in the amendments. Authorities will purchase banks`` share in amount that necessary for improvement of its financial status and bank following standards. "The Government is supposed to decide on shares purchase and there is no need in participation of shareholders and bank` Board. The minimum that government purchases or national managing holding is - 10 %of all outstanding shares of the bank" - the Vice-Chairman of Financial Agency Murat Baisynov told to journalists. Amendments provide compulsory emission or share sale. "The offering price (realization) and number of compulsory outstanding (realized) shares is determined by the decision of government... at market price, formed as on decision made date on outstanding (realization) share" - is said in the amendments. In case of improvement of financial status of the bank, government will realize shares by direct address sale or on the stock exchange during one day since heir purchase. If the situation is not improved during the year, authorities have the right for prolongation of bank's shares realization term. Shareholders have no option right on authorized shares, is said in the draft law. Amendments also formed KZT5.0 m. population deposits guaranteeing. It's a "term and extraordinary" measure will be effective till 2012, Baisynov said. Amendments were included in 10 laws, concerning financial system, he said. Amendments will be effective when the President Nursultan Nazarbaev will sign the document, which he announced as term, and official press will publish it. [2008-10-22]