Kazakhstan’s central bank announced on October 18 that it has approved an assistance package worth KZT410bn (€1.04bn) for ATF Bank, Eurasian Bank, Tsesna Bank and Bank CenterCredit. The funds to assist the four local lenders were approved by the central bank’s board in September and October, the statement added.

The regulator has previously estimated that the government would provide over KZT500bn to support the Central Asian country’s banking system between August and September. The newly approved assistance package is possibly part of a belated amount that the central bank planned to disburse earlier.

Kazakhstan’s banking sector – which has still not fully recovered from the 2008-9 financial crisis – has been hit by a rise in bad loans since the slump in world crude oil prices, which has depressed the entire Kazakh economy. It did not help that the authorities allowed the tenge to float in 2015, leading to a more than 40% depreciation of the national currency. Problem loans in 2016 amounted to 37% of total loans, according to Moody's Investors Service.

Kazakh President Nursultan Nazarbayev has attributed the troubles in the country’s banking sector with bad loans and the subsequent need for the government to buy out bad loans and recapitalise banks on the lack of sufficient control over the banking sector available to the central bank. He posited that cases such as that of BTA bank, which was at first merged with Kazkommertsbank, until its bad loans had to be bought out by the government’s Problem Loans Fund, could have been avoided if the central bank had had more opportunities to regulate the sector.

The Kazakh banking sector is currently going through a consolidation process with a number of banks merging - that includes the recent acquisition by second biggest Kazakh lender Halyk Bank of a 96% stake in largest lender Kazkommertsbank.