How Kazakhstan stabilized its banking sector post-crisis

After the financial crisis, Kazakhstan’s banking system faced a rise in non-performing loans, declining asset quality, and growing structural imbalances. In this environment, the government had to develop a mechanism to stabilize the financial sector and prevent further accumulation of risks.

This is why in 2017 the national regulator (the National Bank of Kazakhstan) launched a large-scale Financial Stability Enhancement Program (FSEP). The program targeted deep vulnerabilities that threatened not only individual banks but the stability of the entire financial system.

Key goals of the program

• ⁠ ⁠recapitalize systemically important or vulnerable banks facing capital shortages;
• ⁠ ⁠clean bank balance sheets from non-performing and hopeless loans;
• ⁠ ⁠reduce the share of loans overdue more than 90 days;
• ⁠ ⁠restore trust in the banking system;
• ⁠ ⁠create conditions for full-scale lending to the real economy.

How the state provided support

Under the FSEP, banks received long-term state financing in the form of subordinated bonds with maturities of up to 15 years and a preferential interest rate of about 4% per year. These terms allowed banks to gradually improve asset quality and restore capital without disrupting credit supply.

Banks included in the program

• ⁠ ⁠Eurasian Bank – 150 billion KZT
• ⁠ ⁠ATF Bank – 100 billion KZT
• ⁠ ⁠Tsesnabank – 100 billion KZT
• ⁠ ⁠Bank CenterCredit – 60 billion KZT
• ⁠ ⁠Bank RBK – 243.7 billion KZT
• ⁠ ⁠Nurbank – 46.8 billion KZT

Separately, Kazkommertsbank received a 250 billion KZT deposit from the Problem Loan Fund, later transferred to Halyk Bank after the merger.

In total, direct support exceeded 700 billion KZT, and considering additional asset purchases, the overall scale of state intervention was even larger.

Why each bank needed support

Kazkommertsbank (KKB)

• ⁠ ⁠Main issue: a chronically high share of non-performing loans inherited after acquiring BTA Bank.
• ⁠ ⁠The size of NPLs led to capital erosion and a growing risk of default.
• ⁠ ⁠The state provided a 250 billion KZT deposit and purchased toxic assets to prevent the collapse of one of the country’s largest banks.

Tsesnabank

• ⁠ ⁠Very high concentration in subsidized and foreign-currency loans to the agricultural sector.
• ⁠ ⁠Deterioration in farmers’ solvency caused sharp portfolio deterioration.
• ⁠ ⁠In 2018-2019 the state bought more than 1 trillion KZT of agricultural loans.

Bank RBK

• ⁠ ⁠One of the most vivid examples of a trust crisis.
• ⁠ ⁠A 2017 default, related-party lending, and high concentration of loans led to rapid capital impairment.
• ⁠ ⁠State support was needed to prevent uncontrolled bank failure.

Bank CenterCredit

• ⁠ ⁠Large corporate loan exposure to sectors hit by the 2014-2015 shocks.
• ⁠ ⁠Support allowed the bank to strengthen reserves and stabilize liquidity.

Eurasian Bank

• ⁠ ⁠High share of risky retail loans and legacy NPLs required recapitalization.

ATF Bank

• ⁠ ⁠Weak capital structure and a large volume of loss-making assets.
• ⁠ ⁠FSEP support became a condition for later restructuring and sale to a new investor.

Nurbank

• ⁠ ⁠The 2019 Asset Quality Review (AQR) revealed the need for substantial reserve increases.
• ⁠ ⁠Together with state support, shareholders injected their own capital.

Early repayment of state support (2023-2025)

As financial indicators improved, several banks began repaying state support ahead of schedule.

Halyk Bank (KKB deposit – 250 bn KZT)

• ⁠ ⁠May 2023 – 28.4 bn KZT
• ⁠ ⁠December 2023 – 40 bn KZT
• ⁠ ⁠April 2024 – 181.6 bn KZT

→ Fully repaid.

Bank CenterCredit

• ⁠ ⁠December 2024 – 20 bn KZT
• ⁠ ⁠April 2025 – 10 bn KZT
• ⁠ ⁠August 2025 – 30 bn KZT

→ Fully repaid.

Bank RBK

• ⁠ ⁠2022-2024 – 67 bn KZT returned
• ⁠ ⁠24 November 2025 – 176.8 bn KZT repaid

→ Fully repaid.

Eurasian Bank

• ⁠ ⁠29 October 2025 – 30 bn KZT (20% of total support)

→ Repayment planned in stages.

Nurbank

• ⁠ ⁠27 November 2025 – 4.5 bn KZT (9.6%)

Alatau City Bank (formerly Jusan, ATF Bank, Tsesnabank)

• ⁠ ⁠18 September 2025 – 50 bn KZT (20 bn + 30 bn)

Why banks rushed to repay

1.⁠ ⁠Dividend restrictions

Banks with outstanding state support cannot pay dividends.

For large and public banks, this is a major constraint.

2.⁠ ⁠New capital and reserve requirements (since 1 September 2025)

Updated minimum reserve requirements (MRR) force banks to hold more reserves against risky assets.

State-provided subordinated debt increases this regulatory burden.

3.⁠ ⁠Reputation and investor trust

Early repayment strengthens a bank’s market image and signals independence from government support.

Benefits of full repayment

• ⁠ ⁠free dividend distribution;
• ⁠ ⁠improved capital structure;
• ⁠ ⁠lower costs of servicing subordinated debt;
• ⁠ ⁠positioning as a fully market-based institution;
• ⁠ ⁠easier compliance with regulatory norms.

Why repayments didn’t happen earlier

Before 2022-2023:

• ⁠ ⁠banks’ financial performance was volatile;
• ⁠ ⁠COVID-19 and the Russia-Ukraine war added pressure;
• ⁠ ⁠incentives to repay early were weak.

Only after stricter requirements were introduced did early repayment become economically rational.

Government support and later tightening of regulatory rules helped banks recover their balance sheets and return to a healthier, more sustainable model. Today, banks are actively leaving the program, proving that the sector has moved toward a more resilient and market-driven financial system. State support is now viewed not as a long-term lifeline, but as a temporary tool to stabilize the system and bring the market back to normal functioning.