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CONTENTS
KUAT KOZHAKHMETOV
Chairman of the Board of Directors, Deputy Governor
of the National Bank of the Republic of Kazakhstan
Kind regards,
Kuat Kozhakhmetov,
Chairman of the Board of Directors,
Deputy Governor of the National Bank of the Republic
of Kazakhstan
Bakyt Kogulov
Chairman, Kazakhstan Deposit Insurance Fund
Kind regards,
Bakyt Kogulov
Chairman, Kazakhstan Deposit Insurance Fund
ABOUT KDIF
After the nancial crisis of 1998 burst in the Russian Federation, establishing legal provisions to ensure protection
of peoples bank deposits became a priority for the Republic of Kazakhstan. At 1 Congress of nanciers of Kazakhstan,
President Nursultan Nazarbayev recommended to elaborate and implement a comprehensive set of system-wide measures,
one being establishment of deposit insurance system.
The KDIF was established by Resolution of the National Bank of the Republic of Kazakhstan Management Board No.
393 dated 15 November, 1999 On incorporation of ZAO Kazakhstan Individuals Deposit Guarantee (Insurance) Fund.
Mission
To contribute to the nancial system stability and protection of rights of the second-tier banks depositors in the
Republic of Kazakhstan.
Vision
The KDIF strives to be:
A highly efcient party in the nancial market which contributes to stability of the domestic nancial system
An organization which adheres the Globally recognized principles for effective deposit insurance systems and
employs Global best practices in its operations
The agent of the Government for the people ensuring protection of their rights and lawful interests
Strategic objectives
To fulll the Financial Sector Development Concept 2030 via advancement of legislation governing deposit
insurance, including assigning the mandate and powers in bank liquidation and insolvency resolution to the KDIF;
To ensure capacity to fulll its critical functions, i.e. to reimburse depositors in a timely and orderly manner in the
event of a member bank failure;
To further develop the provisions for replenishment of the special reserve for payouts, and strengthening nancial
position of the KDIF;
To envisage implementation of integrated protection scheme which extends the Government guarantee to
consumers in certain insurance types;
To extend the deposit insurance coverage to certain types of legal entities (socially meaningful small businesses);
To strengthen the risk assessment practices and controls over the KDIFs operations;
To take intensied effort in maintaining public awareness of deposit insurance and improving general understanding
by people of the deposit insurance system provisions.
of
Membership of all banks which are licensed for accepting deposits and opening and maintenance of bank accounts
individuals being compulsory;
Transparency in operations;
Mitigation of operations specic risks;
Ex-ante accumulation of the special reserve for reimbursing depositors.
Coverage
Maximum coverage limit is 5 million tenge
Deposits of individuals placed with second-tier banks of the Republic of Kazakhstan are insured, excluding for
non-interest bearing demand deposits and investment deposits placed with Islamic banks
Upon an order by President Nursultan Nazarbayev that a system-wide deposit insurance system should be
established, Kazakhstan Individuals Deposits Guarantee (Insurance) Fund was incorporated.
16 largest banks attained membership in deposit insurance system. Coverage was limited to the amount
of 400 thousand tenge.
2002
Following the courts ruling on forced liquidation of OJCS Komirbank the KDIF reimbursed 20 banks
depositors at total amount of 1.7 million tenge.
2003
Novelty in legislation provide for compulsory membership in deposit insurance system for the banks
licensed for accepting deposits and opening and maintenance of bank accounts of individuals.
Following amendments to legislation, deposit insurance coverage extended to all bank deposits of
individuals, excluding for term and conditional deposits exceeding 50 000 US dollars, or the applicable
currency equivalent.
The KDIF became a member organization of International Association of Deposit Insurers (IADI).
2005
Following courts ruling on forced liquidation of JSC Nauryz Bank Kazakhstan, the KDIF reimbursed 3.6
thousand depositors at total amount of 680 million tenge.
2006
7 July, 2006 the President signed Law of the Republic of Kazakhstan On compulsory insurance of deposits
placed with second-tier banks of the Republic of Kazakhstan.
The maximum coverage limit was raised up to 700 thousand tenge.
2007
2009
The KDIF successfully held 7 Annual Meeting and International Conference of the IADI Asia-Pacic
Regional Committee in Almaty. The event gathered over 70 representatives of the deposit insurance
organizations from 20 countries.
The KDIF commenced the work related to the member banks automated insured deposits reporting
databases compliance verication against the requirements set forth in the Contract of Adhesion.
Since deposit insurance system was established in the Republic of Kazakhstan, 3 member banks have undergone
forced liquidation, namely OJSC Komirbank (2001), JSC Nauryz Bank Kazakhstan (2005), and JSC Valut-Tranzit
Bank.
The KDIF reimbursed depositors of JSC Komirbank at total amount of 1.7 million tenge. Liquidation proceedings and
reimbursement of depositors of JSC Nauryz Bank Kazakhstan and JSC Valut-Tranzit Bank is currently in progress.
10
2011
The KDIF successfully held 4 Annual Meeting of the IADI Eurasian Regional Committee in Almaty.
The KDIF accomplished completion and putting in test operation of ad-hoc SalT Inspect Information
System dedicated to streamline the processes related to compliance verication of the member banks
automated insured deposits reporting databases against the requirements set forth in the Contract of
Adhesion.
2012
To ensure maintaining the peoples condence in the banking system, the National Bank provided for a
10% annual increase in the KDIFs authorized capital, what was documented in the Strategic Plan of the
National Bank.
2013
SalT Payout Information System dedicated to streamline the operations in the insured event was put
into test operation.
The KDIF was honored by IADI with award in nomination Deposit Insurance System Improvements
2014
Government of the Republic of Kazakhstan approved the 2030 Financial Sector Development Concept.
The 2030 Concept envisions developing of legislation in part of bank insolvency resolution and liquidation
in a manner that benets all concerned parties in the nancial market and the banks depositors as well,
and also assigning additional mandate and powers to the KDIF and increasing the maximum coverage
limit in compliance with Global best practice.
The Government and the National Bank of the Republic of Kazakhstan made joint statement regarding
increasing the maximum coverage limit up to 10 million tenge within a comprehensive set of provisions
aimed at reducing dollarization of domestic economy. The other related decision was to reduce the
maximum recommended interest rate offered by the member banks on newly accepted deposits in
foreign currency.
11
12
13
Risk management
The Board of Directors established ad-hoc Risk Management Committee.
Organizational structure was improved in terms of risk management and internal audit function.
The KDIF is staffed with specialists holding the academic degrees as candidate of science or master degree in law,
economics and nance, applied mathematics and IT.
The employees adhere to the standards of professional conduct and ethics as generally applied in public service.
14
15
16
17
As of 1 January, 2015 aggregate deposit balances increased by 492.3 billion tenge, or 12.5%, compared to the same
period of the previous year, and comprised 4.4 trillion tenge. National currency adjustment of February 2014 played its
role in mass spillover of retail deposits into foreign currency. Aggregate deposit balances in national currency decreased
by 34.7% over the year, while deposit balances in foreign currency increased by 1257.5 billion tenge, or 72.4%. Currently
deposits in national currency take market share of 33%, compared with 56% as at the end of 2013, and, respectively,
deposit balances in foreign currency take market share of 67%, compared with 44% over the previous year.
The major increase in customer deposits by 2 times or more was performed by JSC Bank RBK (gain of 67.7 billion
tenge, or 200.6%, being reported), JSC Qazaq Banki (+50.7 billion tenge, or 417.2%), JSC Forte Bank (+4.9 billion
tenge, or 155.1%), JSC Capital Bank Kazakhstan (+0.9 billion tenge, or 108.0%). Total gain in customer deposits
reported by these four banks comprised 25.3% of the total increase in deposit balances over all deposit insurance system
member banks.
Following the results reported over 2014, the top-ve banks by aggregate deposit balances are JSC Halyk Bank of
Kazakhstan (which reported gain in deposit balances by 105.5 billion tenge, or 13.2%), with market share of 20.4% in
customer deposit market), JSC Kazkommertzbank (a 52.03 billion tenge, or 8.1%, gain in customer deposit balances
being reported, 15.7% market share), JSC Kaspi Bank (a 7.2 billion tenge (1.8%) gain being reported, 9.4% market
share), JSC Bank CenterCredit (6.3 billion tenge (1.8%) loss being reported, 7.5% market share), JSC SB Sberbank
(75.8 billion tenge (34.1%) gain being reported, 6.7% market share).
18
10,4%
29,5%
Term customer deposits under 5 million tenge
0,4%
47,8%
According to the reporting data of the DIS member banks, as at 1 January, 2015, term deposits take major share in
aggregate customer deposit balances. Term customer deposits comprised 3.9 trillion tenge, or 89.2% share in aggregate
deposit balances, with 512.6 billion tenge, or 15.0%, gain being reported over the year. Deposit balances on current and
card accounts take a lesser share of 10.4%, with 3.8 billion tenge decrease being reported over the year. Customer call
deposits take a share of 0.4% of the aggregate deposit balances, with 16.6 billion decrease being reported over the year.
Gain in aggregate customer deposit balances mainly derives from 841.4 billion tenge (77.0%) increase in large term
deposits in foreign currency over 15 million tenge in equivalent. In the meantime, net increase in large term deposits
over 15 million tenge in equivalent comprised 405.2 billion tenge, or 23.6%, resulting from decrease in these deposits in
national currency by 436.2 billion tenge (-70.4%). Customer term deposits under 5 million tenge increased by 84.0 billion
tenge, or 6.9%, while customer term deposits over 5 million tenge and under 10 million tenge increased by 23.4 billion
tenge (6.6%).
19
20
21
25 September, 2014 the Board of Directors approved the KDIF Strategic Development Plan 2014 2016. The Strategic
Development Plan is aimed at establishing the goals and objectives of top priority for further development of deposit
insurance system in the Republic of Kazakhstan for the three forthcoming years.
The strategic development objectives are established on the basis of comprehensive approach to strategic planning
which considers major risks attributable to the KDIFs operations as well as the effective risk mitigation measures and
the outlook of further enhancement of the core operations of the KDIF to ensure transition of the Kazakhstani deposit
insurance system to the next quality stage in its development.
Among the major strategic development objectives of the KDIF being provided for in the Strategic Development Plan
are the following:
to implement the provisions of the 2030 Financial Sector Development Concept of the Republic of Kazakhstan
through enhancement of legislation that governs deposit insurance, including assigning the liquidation and insolvency
resolution functions to the KDIF at the legislation level, providing for use of the deposit insurance systems funds
in those operations (provided that the KDIF is directly involved in bank insolvency resolution as going concern, and
cost of insolvency resolution does not exceed the liquidation cost, which is duly documented), further increasing the
maximum coverage limit, considering the issue of extension of deposit insurance coverage to current accounts of legal
entities;
to ensure operational capacity to fulll the KDIFs mission critical responsibilities to reimburse depositors in the
event of a member bank failure in timely and orderly manner;
to develop the provisions for sustainable accumulation of the special reserve for payouts, and ensure solvency;
to consider implementation of integrated protection scheme which extends the Government guarantee to
consumers in certain types of insurance;
to strengthen the risk assessment and analysis practices and controls over the KDIFs operations;
to take intensied effort in maintaining public awareness of deposit insurance and improving general understanding
by people of the deposit insurance principles.
Furthermore, in the forthcoming year the KDIF is planning to continue active cooperation with its foreign partner
organizations on the platform of International Association of Deposit Insurers (IADI) through participating in various
standing and ad-hoc committees, working groups, research studies and technical surveys, as well as seminars and
conferences held by IADI and its member organizations.
Moreover, the KDIF is planning to continue its efforts toward enhancement of rules and procedures, as well as internal
procedures related to the core operations of the KDIF, such as ensuring timely and orderly reimbursement of depositors,
participating in temporary administration, liquidation commission and creditor committee, assessment of banks nancial
position for further processing regular premiums, accumulation of special reserve for payouts via effective investment
management operations.
In the forthcoming period, raising the competence and professionalization of staff is also an important issue for the
KDIFs capacity building being critical for the KDIF in fullling its responsibilities.
22
The KDIFs risk management system implies a comprehensive approach to continuous and iterative process of
receiving to-date and unbiased data regarding the potential and occurred risks, as well as the processes of assigning
the level and the extent of effect on KDIFs current operations, regular managerial reporting on risks, development and
implementation of the risk mitigation measures, coordination of risk management operations of the KDIFs units, and
streamlining and improving the risk management processes.
One of the core functions performed by the KDIF according to the effective legislation is to ensure the adequate level
of special reserve for payouts dedicated to reimbursing depositors in the event of a member bank failure, thus assessment
of relevance of risks, particularly the most critical nancial risk, shall be made on the basis of Internationally recognized
principles and implementation of global best practices.
Risk management system implies ongoing monitoring of risks attributable to compliance and reputation on the basis
of external legal and media environment, as well as having in place the relevant action plans, including those ensuring
prompt response.
In 2014, following the resolution of the National Bank, a position of risk manager was provided for in the KDIF stafng.
By the same resolution, Internal Audit Ofce was established. These restructuring and additional stafng is primarily aimed
at ensuring continuity of the KDIFs operations, risk management and risk prevention.
With a view to ensure effective implementation of the risk management provisions, in the end of 2014 the KDIF
Board of Directors established the Risk Management Committee within its structure. This measure will ensure the Board of
Directors being continuously aware of the risk management system developments and the KDIF senior management being
able to take prompt action to address the risk management related issues.
Apart of that, the Risk Management Administration Rules provide for direct participation of the Board of Directors
in decision making regarding the risk management via prompt information delivery and managerial reporting on the
risks inherent to the KDIF operations for the Risk Management Committee, which is supposed to become an effective
communication platform in the risk management areas.
Information security
The ah-hoc KDIF proprietary software, namely the information systems SalT Inspect, SalT Payout, BATA are
used with a view to ensure streamlined and optimized operations. Furthermore, within the forthcoming periods the KDIF
is planning to launch additional information systems to streamline internal operations processes.
In this sense, in order to ensure information security, as well as to allow classication and mitigation of risks
attributable to software development and implementation, the National Bank took the decision to establish the IT Ofce
within the KDIF structure and to develop the respective regulations and guidelines in information security. Following this
resolution, the KDIF introduced, and obtained approval of Information Security Guidelines and Rules for Information
Systems Development, Updating, Completion, Implementation and Administration.
Particularly, the Information Security Guidelines outline the objectives related to ensuring secure information systems
functioning, as well as the core objectives in implementation of the security systems, including organizational and technical
security measures. The Rules also outline general safekeeping and record-keeping requirements applied to software, as
well as the reserve and archive administration procedures, reserving method selection, reserve copying and archiving
administration processes, data recovery, assignment of user rights, anti-virus software requirements. The Rules also
outline the working order for Internet and e-mail users.
In its turn, the Rules for Information Systems Development, Updating, Completion, Implementation and Administration
outline the key areas of work to ensure organizational and technological processes for development of automated
information systems. The Rules provide for the technology and order of record-keeping applied in information systems
development, establish the order for delivery of requests for development, updating, completion and implementation of
information systems (i.e. the life-cycle of information systems), as well as the administration and support operations for
information systems.
23
Development of legislation
Fulllment of goals, objectives and functions of the compulsory deposit insurance system is governed by Constitution
of the Republic of Kazakhstan, the Civil Code, the legal and regulatory provisions, resolutions of the KDIFs Sole Shareholder
or Board of Directors. In this sense, the KDIF remains actively involved in development of legislation governing deposit
insurance.
In August 2014, Government of the Republic of Kazakhstan approved 2030 Financial Sector Development Concept.
The Concept is aimed at building the nancial sector being upmost effective in its nancial intermediation function for
society, State, and nancial organizations. Herewith, in identication areas for improvement, developments that are
currently taking place in the Global context have to be addressed as well. The KDIF, within the limits of its jurisdiction,
took part in elaboration of the Financial Sector Development Concept 2030.
As part of the measures aimed at addressing bank insolvency resolution issues, provisions for bank insolvency
resolution as going concern via conservation and purchase-and-assumption transaction (including transfer of insured
deposits) will be elaborated. Those provisions are supposed to be efcient and sensitive in addressing the needs of the
market participants, and comprehensible enough for depositors. In this framework, as well as a measure of the deposit
insurance system development, the following arrangements will be put into practice:
1) assignment of the bank insolvency functions (after the withdrawal of banks license) to the KDIF,
2) ensuring use of the deposit insurance system funds provided that the KDIF is directly involved in the bank
insolvency resolution processes as going concern, and documentary verication that the resolution costs not exceeding the
liquidation costs being made,
3) considering further increase of the maximum coverage limit according to the Core Principles for Effective Deposit
Insurance Systems (the maximum coverage limit is established in such a way that 90% or more accounts is fully covered,
and under 50% of total deposit balances is covered),
4) considering extension of coverage to current accounts of legal entities.
In line, legislation governing banking businesses will be enhanced in part of establishing grounds and criteria for
implementation of measures aimed at bank insolvency resolution as going or gone concern (purchase and assumption
transaction, establishment of bridge bank, forced obligations restructuring and bail in, etc.), presumably within the period
of 2016 2018.
Enhancement of bank liquidation procedures implies establishment of a revised regimes of institutional mandate and
powers, along with optimization of procedures of writing unrecoverable liabilities off by the receiver.
Novelty in the documents governing deposit insurance system
9 Contract of Adhesion
9 Rules for determining and establishing the order of payment of compulsory regular, additional and
extraordinary premiums
9 Rules for compliance verication of the automated databases for recording insured deposits of the DIS
member banks with the standard requirements by the KDIF as established with the Contract of Adhesion
9 Methodology for establishing the maximum recommended interest rates on the newly accepted bank
deposits of individuals
Newly introduced documents
9 Risk Management Administration Rules
9 Information Security Guidelines
9 Rules for Information Systems Development, Updating, Completion, Implementation and Administration
9 Methodology for determination of the target reserve ratio and amount
24
In 2014, in order to fulll its mission to ensure protection of rights and lawful interests of depositors and increasing
public trust in domestic banking system and, in a broader sense, to contribute to stability of banking system, the KDIF was
taking active part in drafting amendments to the Law of the Republic of Kazakhstan On compulsory insurance of deposits
placed with second-tier banks in the Republic of Kazakhstan in part of increasing the maximum coverage limit from 5
million up to 10 million tenge.
Furthermore, in the framework of general course for deposit insurance system development, the KDIF was actively
involved in assignments under direct supervision of the National Bank, particularly the following:
1) Financial Sector Assessment Program by the International Monetary Fund,
2) Elaboration of Rules for procurement of good and services by the National Bank of the Republic of Kazakhstan
and its subsidiary legal entities,
3) Discussion of problem issues related to JSC Valut-Tranzit Bank in the process of liquidation.
25
26
27
CORPORATE GOVERNANCE
The National Bank is the founder, the sole shareholder, and higher governing body of the KDIF.
According to the KDIFs Corporate Charter, Deputy Governor of the National Bank Mr. Nurlan Kussainov is empowered
to take all decisions falling within the purview of the Sole Shareholders competence.
In 2014, the KDIFs Board of Directors consisted of 8 members, three being Independent Directors and one being
the KDIFs Chairman. Deputy Governor of the National Bank of the Republic of Kazakhstan Mr. Kuat Kozhakhmetov is the
Chairman of the Board of Directors.
As of the end of 2014, three Committees of the Board of Directors were established:
1) Strategic Planning And Internal Audit Committee,
2) Risk Management Committee,
3) Stafng, Remuneration And Social Affairs Committee.
The Risk Management Committee was established in 2014.
During 2014, 6 meetings of the Board of Directors were held, 5 being in-person meetings and 1 being absent vote.
28
29
MUKHTAR BUBEYEV
Mr. Mukhtar Bubeyev currently holds the position of Research and Strategic Analysis
Department Director in the National Bank of the Republic of Kazakhstan.
Earlier, since 2011 Mr. Bubeyev was holding the position of Deputy Chairperson of
the Committee of the National Bank for control and supervision of nancial market and
nancial organizations. Later on, in 2014, Mr. Bubeyev was appointed Acting Chairman of
the Committee.
Graduate of London School of Economics and Political Science.
30
31
MERUERT KARDZHANOVA
JSC Halyk Bank of
Kazakhstan
Chairperson of the Advisory
Council in 2014, Customer and
Agency Services Marketing
Department Director
32
IRINA STEPANOVA
JSC Bank RBK
Managing Director
TATYANA BELOVA
JCS Alliance Bank
Retail Banking Department
Director
ALEXEY SYCHEV
JSC Kazkommertzbank
Retail Banking Department
Director
ANTON LEE
JSC ATF Bank
Managing Director Member of
the Management Board
ANDREY TIMCHENKO
JSC Subsidiary Bank
Sberbank
Deputy Chairman of the Board
Retail Business Development
LARISSA ZDANOVICH
JSC Bank CenterCredit
Planning and Finance
Department Director
AYGERYM ZHAPPAROVA
JSC BTA Bank
Managing Director Member of
the Management Board
BERTRAN GOSSAR
JSC Eurasian Bank
Managing Director Retail
Banking Strategy Department
Director
KAYRAT ALTYNBEKOV
JSC Housing Construction
Savings Bank of Kazakhstan
Deputy Chairman of the Board
Observers
BULAN KOPESHOV
PAVEL MIRONOV
DINA KALIYEVA
RUSTAM YAKUPBAYEV
33
34
35
0,04
0,08
0,11
0,19
0,38
0,5
36
The differential premium system BATA builds upon the key nancial indicators and implies 6 classication groups,
each being assigned a respective premium rate. Over the reporting year, 9 member banks strengthened their positions and
moved up to a group with lower premium rates, while 3 member banks settled the breach of the recommended interest
rates offered on new insured bank deposits, and thus left the classication group S, and 23 member banks retained their
positions. Furthermore, in 2014 two banks attained membership in deposit insurance system, which implies being assigned
classication group D for two consecutive years.
Following the results of the 4 quarter, 2014, the deposit insurance system member banks were distributed among the
classication group as follows: Group A taking a share of 5.4% (2 banks being assigned), 18.9% Group B (7 banks), 40.5%
Group C (15 banks), 27.0% Group D (10 banks), 5.4% Group E (2 banks), and 2.7% Group S (1 bank).
18
17
16
15
14
11
Group (0,08%)
10
3
1
10
Group (0,11%)
5
1
Group (0,04%)
12
7
Group D (0,19%)
2 2
1 1
Group D (0,38%)
1
Group S (0,5%)
4 Qr. 2013
1 Qr. 2014
2 Qr. 2014
3 Qr. 2014
4 Qr. 2014
37
Reimbursement of depositors in the event of a member bank failure will be provided for by the means of the special
reserve for payouts, which is accumulated on ex-ante basis.
According to the legislation, the special reserve for payouts shall be accumulated within the limits of, and by the
means of:
1) compulsory regular premiums paid by member banks,
2) nes applied to the member banks for failure to comply with the Contract of Adhesion provisions, or improper
fulllment of their respective obligations,
3) funds received in claim settlement by a member bank in forced liquidation,
4) investment income arising from allocation of the special reserve assets,
5) other allowances upon resolution of the Sole Shareholder.
The Guidelines for determination of the target reserve ratio and amount
According to the Law of the Republic of Kazakhstan On compulsory insurance of deposits placed with second-tier
banks in the Republic of Kazakhstan, the target reserve ratio must be equal to, or exceed 5% of total insured deposit
balances among the member banks.
In 2014, the KDIF accomplished revision of, and obtained approval by the Board of Directors for the Guidelines for
determination of the target reserve ratio and amount. In accordance with the Global best practices, the target reserve ratio
for the KDIF in 2014 is determined at the rate of 6.9% of the total insured deposit balances in the deposit insurance system
member banks. The actual reserve ratio in 2014 accounted for 4.9% without consideration of 70% of the KDIF authorized
capital, and 7.2% with consideration of 70% of the KDIFs authorized capital.
200
150
100
Net income
50
The KDIF's expenses by
the means of allocation 70%
of the authorized capital
0
01.01.2011
38
01.01.2012
01.01.2013
01.01.2014
01.01.2015
The KDIF reported increase in net income by 3.2 billion tenge over 2000 2013, the share of the net income in the
special reserve structure comprising 19.7%, compared to 22.8% as of the end of 2013. The amounts payable in settlement
the KDIFs claim to the liquidation commissions of OJSC Komirbank, JSC Nauryz Bank Kazakhstan and JSC Valut-Tranzit
Bank increased by 920 million tenge, and comprised 9.4 billion tenge.
By resolution of the Sole Shareholder, the special reserve for payouts was increased by 8.5 billion tenge by the means
of the KDIFs expenses under the provisions of subparagraph 1, paragraph 1, Article 22 of the Law of the Republic of
Kazakhstan On compulsory insurance of deposits placed with second-tier banks in the Republic of Kazakhstan. In 2014,
the National Bank of the Republic of Kazakhstan increased the KDIFs authorized capital balance by 10%, or by 177.2 billion
tenge.
The maximum amount which could be allocated to reimbursing depositors in the event of a member bank failure
comprises 320.9 billion tenge.
39
INVESTMENT MANAGEMENT
Approved nancial instruments in national currency for allocation of special reserve assets and
the KDIF proprietary assets:
9 Sovereign bonds of the Republic of Kazakhstan;
9 Repurchase agreements traded on stock exchange and OTC (sovereign bonds of the Republic of Kazakhstan
being solely accepted as collateral);
9 Deposits placed with the National Bank of the Republic of Kazakhstan;
9 Financial instruments issued by National Holding Companies and National Companies (not exceeding 30%
of the proprietary assets portfolio or 10% of the proprietary assets portfolio, respectively).
40
400
350
338,1
300
282,3
250
243,9
202,4
200
162,1
150
122,5
100
50
0
10,7
14,3
31
December
2005
31
December
2006
26,6
31
December
2007
31
December
2008
31
December
2009
31
December
2010
31
December
2011
31
December
2012
31
December
2013
31
December
2014
As of the end of reporting period, present value of the KDIF assets in investment management comprised 400.9 billion
tenge (96.2% of the total assets). Following the 2014 results, investment income comprised 31.3 billion tenge (increase by
64.7% over the year). Over 2014, present value of the KDIF assets increased by 73.7 billion tenge, or 22.5%.
Following the developments on the currency exchange market, banking sector, shifts in returns of certain nancial
instruments, as well as other factors, the KDIF shall revise its Investment Management Strategy.
Since 2008 on, the KDIF in coordination with the Government of the Republic of Kazakhstan and the regulatory
authorities has been engaged in the investment income tax exemption effort. The KDIF repeatedly initiated the discussion
with the authorized units of Ministry of Finance, Ministry of Economy and Budget Planning and the National Bank of the
Republic of Kazakhstan. Furthermore, the KDIF actively participated in the meetings of the special task force for making
amendments to the Tax Code of the Republic of Kazakhstan, and initiated discussion of this issue at the meetings with the
representatives of the Upper and Lower Chambers of Parliament of the Republic of Kazakhstan (Senate and Mazhilis). As a
result of this effort, the respective amendments to the Tax Code of the Republic of Kazakhstan were made. Simultaneously,
amendment to Law On compulsory insurance of deposits placed with second-tier banks in the Republic of Kazakhstan
was introduced setting up the provisions for segregated reporting of proprietary assets and assets of special reserve for
payouts.
41
In order to ensure efcient fulllment of obligations associated with reimbursing depositors in the events and in the
order as established in the Law of the Republic of Kazakhstan On compulsory insurance of deposits placed with secondtier banks in the Republic of Kazakhstan and in compliance with the effective legislation, the KDIF shall verify compliance
of the banks automated insured deposit recording databases with the requirements of the KDIF. These actions aim at
ensuring completeness and accuracy of data, as well as at improving the quality of the depositors records in banks.
Since 2009, the KDIF commenced the examinations to verify compliance of the automated insured deposit reporting
databases in the member banks on regular basis. In total, over the period commencing 2009 to 2014, the KDIF have
completed the examinations to verify compliance of the automated insured deposit reporting databases in 32 member
banks, including 6 member banks in 2014, 1 examination being conducted repeatedly to verify elimination of the non
compliant practices which had previously been detected.
The compliance verication examinations are conducted via the SalT Inspect Information System which is the
KDIFs proprietary software developed in 2011. This software allows fast-tracking of the electronic deposit databases
quality, detecting errors in depositor identication data and account details, and keeping statistics records on errors being
detected.
In the beginning of 2014, the SalT Inspect Information System was updated, and testing was processed on the
depositor database of a member bank a part of compliance verication checks. Update and completion was conducted on
a monthly basis as provided for in the agreement with the software development vendor. By the end of 2014, the KDIF
conducted operational testing of SalT Inspect Information System in coordination with ad-hoc commission dedicated to
putting the property and equipment and intangible assets into operation.
During 2014, the KDIF continued delivery of the SalT Inspect Information System to the member banks for
autonomous testing. Furthermore, following the decision of the KDIF Advisory Council, in order to fulll the opportunities
for the banks related to autonomous testing of their proprietary insured deposits reporting databases, the KDIF is planning
to install the SalT Inspect Information System in all member banks.
The SalT Payout Information System is used in operations of the KDIF after forced liquidation of a member bank has
commenced, and automates the processes related to recording and control of quality of data delivered by the liquidation
commission of the bank in forced liquidation, recording and control of quality of the payouts reports delivered by the agent
bank, completeness of the depositors les which are submitted to the KDIF by the agent bank, including the documents
verifying accuracy of the payouts, and report generation for analysis and display of statistics on the uploaded information.
Since 2014, the KDIF has been processing a series of tests to enable completion of the SalT Payout Information System
to ensure completion and improvement of this software.
The KDIF is planning to put the software into commercial operation in 2 semester of 2015.
Since July, 2014 the KDIF has been conducting operations specic to administration of possible additional payouts to
depositors of JSC Valut-Trazit Bank. Action Plan dated 14 November, 2014 was approved among the KDIF, the National
Bank and the liquidation commission.
In order to ensure operational capacity of the KDIF to process additional payouts to depositors of JSC Valut-Tranzit
Bank in timely and orderly manner, in the end of 2014 the respective stress-testing was processed to verify smooth
operation of the KDIF commencing from the date of adoption of the respective provisions in the legislation of the Republic
of Kazakhstan.
Following the results of the stress-testing, the KDIF was able to take action to streamline the payouts processing tools
and provisions, namely:
Action Plan for the KDIF in the event of additional payouts processing by agent bank,
Action Plan for the KDIF in the event of additional payouts processing via its own means.
In stress-testing, special attention was paid to the following key objectives:
Generating depositor register,
Selection of the agent bank for payouts,
Payouts processing.
Following the results of stress-testing, a step-by-step action plan was elaborated with regard to operations conducted
by each unit involved in payouts, and the employees in charge are appointed per each item. The KDIF also drafted public
communication in Kazakh and Russian languages.
In the meantime, during the reporting year, the KDIF was actively involved in negotiation processes with National Post
Service Operator JSC Kazpost to tentatively address the issues in the event if none of the member banks comply with
special requirements to the agent bank in accordance with the Agent Bank Selection Guidelines.
42
As of 31 December, 2014 the total reimbursement amount to the depositors of JSC Nauryz Bank Kazakhstan
comprised 680 million tenge, what accounts for 88% depositors claims against the KDIF.
By year-end 2014, the liquidation commission has settled the KDIFs claim at 88%. Over the last 3 years, in the
liquidation proceedings of JSC Nauryz Bank Kazakhstan no payment to settle the KDIFs claim was made by the liquidation
commission.
The total reimbursement paid out to the depositors of JSC Valut-Tranzit Bank comprised 13.87 billion tenge, or 98%
depositors claims against the KDIF.
The remaining unsettled reimbursement amounts are liabilities on dormant accounts which are 0.01 tenge to 5001000 tenge in value, and which have not been demanded.
By 1 January, 2015, the liquidation commission of JSC Valut-Tranzit Bank has settled the KDIFs claims at the amount
of 8 673 billion tenge, or 61.5%.
Amounts
payable KDIF
to depositors
(million tenge)
Reimbursement paid
(%)
772
680
3,6
679,4
88
14 103
13 876
63,2
8 673
61,5
In 2014, the KDIF was planning a target claim settlement ratio (arising from reimbursement of insured depositors)
from JSC Nauryz Bank Kazakhstan at the level of 90% of the total claim amount, JSC Valut-Tranzit Bank at the level
of 65% total claim amount. In 2014, the resulting mismatch with the outlook comprised 2% for JSC Nauryz Bank
Kazakhstan, and 3.5% for JSC Valut-Tranzit Bank.
The core issues impeding failure to replenish the special reserve via the means of the liquidation commission liabilities
settlement were certain issues related to accounts receivable recovery and poor performance in enforcement proceedings.
The issues related to accounts payable recovery in enforcement proceedings are:
missing documents in original or in copy, including credit and leasing les,
missing agreements between the bank and its counteragents regarding real estate transactions in original,
denial by the court to take legal action following a request to initiate civil proceedings based on the fact that the
defendant is declared a fraudulent entity,
absence of legal entity at its registered ofce,
exclusion of the State legal entities register of a limited liability partnership that holds registered rights to real
estate,
no access to the case le materials at the stage of preparation of court claims.
The other issues include:
Zero balances on current bank accounts of the accounts payable,
Insufcient or missing liquidation property for full settlement of the claim,
Low market value of collateral and other property owned by the accounts payable,
Lengthy fulllment of the court decisions by the court executors,
Loss of case le materials.
During 2014, the KDIFs claims to the JSC Valut-Tranzit Bank liquidation commission were settled at the amount of
920 million tenge. Resulting from zero cash balances at disposal of JSC Nauryz Bank Kazakhstan liquidation commission,
no KDIFs claims were settled.
43
44
INTERNATIONAL COOPERATION
In 2014, the KDIF accomplished work related to strengthening bilateral relations with certain deposit insurance
organizations.
For instance, in June 2014 the KDIF signed memorandum on mutual understanding and cooperation with the
Deposit Insurance Agency of Russian Federation. In series of bilateral meetings with the DIA representatives, the senior
management and expert staff of the KDIF received consultations in the eld of administration of liquidation procedures,
obtained consultations regarding bank liquidation, including the liquidation procedures administration, legal and judicial
claim administration in banks in liquidation, as well as development of the ad-hoc dedicated software.
Apart of that, in 2014, the KDIF signed memoranda of understanding and cooperation with Azerbaijan Deposit
Insurance Fund and Deposit Insurance Fund of Turkey. On the basis of the provisions agreed with the Azerbaijan Deposit
Insurance Fund, the KDIF arranged a bilateral technical seminar and held a number of consultations which covered the
issues related to development of differential premium system and risk assessment.
The KDIFs representatives were taking part as speakers or moderators at Technical Seminar concerning establishment
and enhancement of differential premium system hosted by Azerbaijan Deposit Insurance Fund, and at the Asia Pacic
Regional Committee Conference on bail-in implications in bank insolvency resolution where they discussed the experience
gained in bail-in processes in JSC BTA Bank and JSC Temirbank. Furthermore, the representatives of the KDIF were
taking part in online seminars hosted by Azerbaijan Deposit Insurance Fund which covered the various issues of bank
liquidation, development of differential premium system, and maintaining public awareness of deposit insurance.
During the year, on the IADI platform, the KDIF was actively involved in working processes of the IADI Executive
Council, Eurasia and Asia-Pacic Regional Committees, and a broad range of standing committees and working groups,
including Data and Survey Committee, Research and Guidance Committee, Subcommittee on the Recoveries from Assets
of Failed Banks, Subcommittee on Bail-In Implications for Deposit Insurance and Funding.
During the year, the KDIF was taking part in various IADI research initiatives. Particularly, the KDIF submitted its
responses to the IADI Annual Survey 2013, which is a comprehensive reporting tool of a deposit insurance system, and a
survey on mandate and powers of a deposit insurance organization in bail-in processes. Apart of that, the KDIF initiated
two surveys and distributed those surveys to the IADI member organizations. The initiated surveys focused on mandate
and powers of creditor committee of a bank in forced liquidation and the policies and practices of investment management.
One of the major events for IADI during 2014 was approval of the revised Core Principles for Effective Deposit
Insurance Systems. The senior experts of the KDIF were taking part in this work. Huge collective work was accomplished
by the ad-hoc Joint Working Group for revision of the IADI Core Principles comprising senior management and expert staff
from deposit insurance organizations from around the Globe. In October, 2014, as an agenda item of the IADI General
Meeting, the Revised Core Principles were approved following interim approval by International Monetary Fund and Basel
Committee on Banking Supervision.
In the revised version, new principles Deposit insurers role in contingency planning and crisis management and
Sources and use of funds were introduced. One of the critical novelties in the revised version is a recommendation that
the payouts commencement period should be reduced to 7 working days.
During 2015 2016 the KDIF is planning to accomplish compliance assessment to the revised version of the IADI Core
Principles by its own means or in cooperation with the National Bank following adoption of the assessment methodology.
In 2014, the KDIF was coordinating technical assistance opportunities with the Asian Development Bank in order to
ensure capacity building in bank insolvency resolution, bank liquidation and transferring of mandate and powers related to
liquidation procedures from the National Bank to the KDIF.
The KDIF drafted terms of reference in order to give the technical assistance areas in details which was delivered
to the ADB and considered for further work. Furthermore, the KDIF approved Aide Memoire and information security
agreement draft supposed to be agreed among the parties.
In 2015 2016, the KDIF is planning to strengthen bilateral cooperation opportunities with a broad range of deposit
insurance organizations (via agreeing memoranda of understanding and cooperation, hosting bilateral meetings and
technical seminars etc.), and the ADB.
45
46
47
Auditors responsibility
Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial
statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material
misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Companys preparation and fair presentation of the nancial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Companys internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management of the Company, as well as evaluating
the overall presentation of the nancial statements.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for auditors
opinion.
Opinion
In our opinion the nancial statements represents authentically in all material aspects, nancial position of the
Company as at 31 December 2014, and results of its activity and cash ow for the year ended on specied date is in
accordance with International Reporting Financial Standards.
General Director,
Auditor:
Qualication license 0318
Dated 2 May 1997.
Mamyr - 4, h.14, Almaty,
Republic of Kazakhstan
48
T.E. Nurgaziyev
In KZT thousands
2014
2013
ASSETS
Cash and cash equivalents
5 875 525
6 244 345
2 779 554
2 334 226
150 121
115 006
1 707
1 753
Other assets
5 529
11 369
4 870
4 038
10 132
10 571
Intangible assets
25 072
30 402
TOTAL ASSETS
19 142 454
3 316 469
1 258 172
(340 164)
Surplus
1 610 510
1 464 100
TOTAL EQUITY
32
975
6 802
2 340 945
158 119
2 341 952
164 921
49
In KZT thousands
2014
2013
16 464 104
12 395 670
(105 126)
(38 570)
16 358 978
12 357 100
31 304 307
25 996 961
11 692 442
1 265 683
1 116
1 024
Interest income
Interest expense
Other income
Other expenses
Administrative expenses
(Prot) /loss before taxation
Expense for income tax
Prot for year
Mandatory distribution of net income from contributions of participating banks
and proceeds from liquidation commission in the special reimbursement
reserve
Prot after mandatory distribution
(51)
(405 606)
(308 419)
58 951 186
39 312 349
832
1 081
58 952 018
39 313 430
27 647 711
13 316 469
1 717 546
1 717 546
27 647 711
15 034 015
50
In KZT thousands
Charter
capital
Balance as at
31 December 2012
146 410 000
Prot (loss) for year
Other comprehensive income (loss)
for year
Comprehensive income (loss) for
year
Issue of shares
14 641 000
Reserve capital formation
Formation of special reimbursement
reserve
Mandatory
distribution
of
net
income
from
contributions
of
participating banks and proceeds from
liquidation commission in the special
reimbursement reserve
Balance as at
31 December 2013
161 051 000
Changes in accounting policy,
adjustments of past periods
Balance as at 31 December 2013
after adjustment
161 051 000
Prot (loss) for year
Other comprehensive income (loss)
for year
Comprehensive income (loss) for
year
Issue of shares
16 105 000
Reserve capital formation
Formation of special reimbursement
reserve
Mandatory
distribution
of
net
income
from
contributions
of
participating banks and proceeds from
liquidation commission in the special
reimbursement reserve
Balance as at
31 December 2014
177 156 000
Revaluation
reserve
Special
reimbursement
reserve
Reserve
capital
Retained
earnings
Total
9 678 603
13 316 469
1 717 546
1 717 546
1 717 546
-
133 100
13 316 469
(133 100)
15 034 015
14 641 000
-
19 545 503
25 996 961
25 996 961
3 316 469
(5 256)
(5 256)*
3 311 213
27 647 711
1 598 336
1 598 336
1 598 336
-
146 410
27 647 711
(146 410)
29 246 047
16 105 000
-
11 670 060
31 304 307
31 304 307
19 142 454
* Adjustments of past periods have been performed by the Company due to violation of Accounting Policy, and article
71 IFRS 38 Accounting of Accounting of intangible assets.
51
In KZT thousands
Cash ow from operating activities:
Cash inow, total
Proceeds from mandatory calendar payments
Proceeds from liquidation committee
Receipt of interest on deposits placed with banks
Interest received on available-for-sale nancial assets
Interest received on transaction of reverse repo
Other
Cash outows, total
Payments to suppliers goods and services
Payment of travel expenses
Payroll payment
Corporate income tax paid
Other taxes and other obligatory payments to the budget
Reimbursement on retail deposit of individuals
Other payments
Net cash ow used in operating activity
Cash ow from investment activities:
Cash inow, total
Including:
Proceeds from redemption of available-for-sale nancial assets
Proceeds from transaction of reverse repo
Cash outows, total
Including:
Acquisition of xed assets
Acquisition of intangible assets
Acquisition of available-for-sale nancial assets
Disposal on transaction of reverse repo
Other payments
Net cash ow total from investment activities
Cash ow from nancial activities
Cash inow, total
Including:
Issue of ordinary shares
Cash outows, total
Net cash ow total from nancial activities
Net change in cash
Effect of exchange rate changes on cash balances in foreign currency
Cash and cash equivalents at the beginning of reporting period
Cash and cash equivalents at the end of reporting period
52
2014
2013
48 244 517
32 077 269
920 000
37 895
15 035 282
135 893
38 178
411 605
103 058
8 976
178 812
28 428
63 893
925
27 513
47 832 912
38 973 931
26 225 847
748 000
7 325
11 978 020
3 563
11 176
428 464
104 789
6 377
126 376
117 096
48 023
808
24 995
38 545 467
96 073 210
88 992 051
249 372 862
3
10
173 178
76 180
842
561
419
040
(64 307 601)
4
26
144 424
22 443
584
627
035
017
(50 346 362)
16 105 000
14 641 000
16 105 000
16 105 000
(369 689)
869
6 244 345
14 641 000
14 641 000
2 840 105
(152 186)
3 556 426
5 875 525
6 244 345
GLOSSARY OF TERMS
AGENT BANK
MEMBER BANK
PREMIUMS
COVERAGE
INSURED DEPOSIT
CONTRACT OF ADHESION
The contract of adhesion of a bank to the deposit insurance system, the conditions
thereof are determined by KDIF as equal to all member banks entering deposit
insurance system
QUALITY INDICATORS
QUALITATIVE INDICATORS
MAXIMUM RECOMMENDED
INTEREST RATES ON
DEPOSITS
The maximum interest rates on newly placed deposits of individuals (in tenge
or foreign currency) with the member banks which are established by Board of
Directors and recommended to member banks for consideration
AGGREGATE CUMULATIVE
GRADE
The aggregate cumulative grade assigned to a member bank for the reporting
period (a calendar quarter) which determines the rate for differential premium
which is calculated in consideration of total grades of the member bank for
the last consecutive seven quarters, including the reporting period (a calendar
quarter)
CERTIFICATE OF MEMBER
BANK
The document which is issued by KDIF to a member bank which identies its
membership in deposit insurance system
The complex of administration and legal actions which are stipulated by Law of
the Republic of Kazakhstan On compulsory insurance of deposits placed with
second-tier banks of the Republic of Kazakhstan which are aimed to protection
of rights and lawful interests of depositors of the member banks
FINANCIAL REGULATOR
53
ABBREVIATIONS
AFK
APRC
CIS
COMPLIANCE VERIFICATION
The inspections for compliance verication of the member banks insured deposit
reporting database with the Contract of Adhesion
DIS
DPS
EARC
Committee for the control and supervision of the nancial market and nancial
organizations of the National Bank of the Republic of Kazakhstan
IADI
IMF
IS
Information system
JSC
MEMBER BANKS
NBK, NBRK
RF
Russian Federation
THE KDIF
54
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