RESOLUTION OF BOARD OF NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN

of May 27, 2014 No. 97

About modification and amendments in some regulatory legal acts of the Republic of Kazakhstan concerning banking regulation

For the purpose of enhancement of the regulatory legal acts of the Republic of Kazakhstan regulating activities of banks of the second level, the Board of National Bank of the Republic of Kazakhstan DECIDES:

1. Bring in the resolution of Board of the Agency of the Republic of Kazakhstan on regulation and supervision of the financial market and the financial organizations of September 30, 2005 No. 358 "About approval of the Instruction about normative values and technique of calculations of prudential standard rates for banks of the second level" (registered in the Register of state registration of regulatory legal acts at No. 3924) the following changes and amendments:

in the Instruction about normative values and the technique of calculations of prudential standard rates for banks of the second level approved by the specified resolution:

state preamble in the following edition:

"This Instruction establishes normative values and technique of calculations of the prudential standard rates obligatory to observance of the second level by banks (further - banks). Normative values are expressed by number with three signs after comma.

During the period from January 1, 2015 to December 31, 2015 calculation of prudential standard rates is perfromed on the basis of the financial reporting constituted according to international accounting standards (further - IFRS) banks.

Since January 1, 2016 calculation of prudential standard rates is perfromed on the basis of the financial reporting, and in case of availability of the affiliated organizations - the consolidated financial statements constituted according to IFRS, except for the affiliated insurance (reinsurance) organizations.";

state Item 3 in the following edition:

"3. The equity is calculated as capital sum of the first level and the capital of the second level.

For the purposes of this Instruction, in addition to long-term credit rating evaluations of the Standard&Poor agency "s, authorized body are also recognized long-term credit rating evaluations of the Moody agencies" to s Investors Service and Fitch (further - other rating agencies).

For the purposes of this Instruction the following organizations treat international financial institutions:

Asian Development Bank (Asian Development Bank);

African development bank (African Development Bank);

Development bank of the European Council (Council of Europe Development Bank);

Eurasian Development Bank;

European Bank for Reconstruction and Development (European Bank for Reconstruction and Development);

European Investment Bank (European Investment Bank);

Islamic development bank (Islamic Development Bank);

Islamic corporation on private sector development (ICD);

Inter-American Development Bank (Inter-American Development Bank);

International Development Association;

International Finance Corporation (International Finance Corporation);

International Bank for Reconstruction and Development (International Bank for Reconstruction and Development);

International Monetary Fund;

International Centre for Settlement of Investment Disputes;

Multilateral agency of guarantee of investments;

Scandinavian investment bank (Nordic Investment Bank).";

state item 4 in the following edition:

"4. The capital of the first level is calculated as the amount of fixed capital and the added capital:

1) fixed capital is calculated as the amount:

the paid common shares corresponding to criteria of the financial instruments of fixed capital provided by appendix 1-1 to this Instruction;

since January 1, 2018 the paid common shares issued by subsidiary banks belonging to minority shareholders (third parties);

supplementary paid-in capital;

retained net profit of last years;

retained net profit of the current year;

the cumulative opened reserve determined as the amount of remaining balance on the balance sheet account 3510 "Reserve capital" of the Standard chart of accounts of the financial accounting in banks, the mortgage organizations and Development Bank of Kazakhstan joint-stock company approved by the resolution of Board of National Bank of the Republic of Kazakhstan of January 31, 2011 No. 3 (registered in the Register of state registration of regulatory legal acts at No. 6793) (further - the Standard chart of accounts) as of January 1, 2014 and 3400 "Dynamic reserves" of the Standard chart of accounts as of January 1, 2014;

reserves on revaluation of fixed assets and the cost of financial assets, available for sale;

minus the following regulatory adjustments:

own redeemed common shares;

intangible assets, including goodwill;

losses of last years;

losses of the current year;

deferred tax asset minus deferred tax liabilities, except for parts of the deferred tax assets recognized concerning deductible temporary differences;

reserves on other revaluation;

the sales returns connected with transactions on securitization of assets. The marginal income of future periods in connection with the expectation of the complete or partial income in the future received from securitization conditions belongs to such income;

the income or losses from change of fair value of the financial liability, in connection with change of credit risk according to such obligation according to IFRS 9;

the regulatory adjustments which are deductible from the added capital, but in connection with its insufficient level subtracted from fixed capital;

the investments specified in Item 4-1 of this Instruction;

2) the added capital joins the termless agreements corresponding to the criteria established in appendix 1-1 to this Instruction as a result of which at the same time there is financial asset at one person and the financial liability or other financial instrument confirming the right to share of the assets of the legal entity which remained later deductions of all its obligations at other person (further - termless financial instruments) and also the paid preferred shares corresponding to criteria the installed application 1-1 to this Instruction.

The size of the added capital decreases by the amount of the following regulatory adjustments:

investments of bank into own termless financial instruments by direct or indirect method;

own redeemed preferred shares of bank;

the investments specified in Item 4-1 of this Instruction;

the regulatory adjustments which are deductible from the capital of the second level, but in connection with its insufficient level subtracted from the added capital.

If the amount of the added capital of bank is insufficient for implementation of deduction, then the rest is subtracted from fixed capital of bank.

Investments of bank represent investments of bank in the share (shares in the authorized capital), termless financial instruments, and also subordinated debt of the legal entity.";

add with Item 4-1 of the following content:

"4-1. The deduction of stock investment (share in the authorized capital), termless financial instruments, subordinated debt (further - financial instruments) banks from the capital of the first level is performed in the following procedure:

1) from fixed capital:

from January 1, 2015 to December 31, 2015:

the amount of the investments constituting less than 10 (ten) percent from issued shares of insurance company, in total exceeding 10 (ten) percent from fixed capital of bank;

the amount of the investments constituting 10 (ten) and more percent from issued shares of insurance company, in total exceeding 15 (fifteen) percent from fixed capital of bank;

since January 1, 2016:

investments of bank into financial instruments of legal entities which financial reporting are not consolidated in case of creation of the financial reporting of bank according to IFRS, according to the following conditions:

if investments of bank into financial instruments of the financial organizations in which the bank has less than 10 (ten) percent of issued shares (shares in the authorized capital) in total exceed 10 (ten) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the exceeding amount increased by share of investments into common shares in the total amount of investments is deductible from fixed capital;

if investments of bank into common shares of the financial organization in which the bank has 10 (ten) and more percent from issued shares (shares in the authorized capital) and also part of the deferred tax assets recognized concerning deductible temporary differences in total exceed 15 (fifteen) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the amount of exceeding is deductible from fixed capital.

Since January 1, 2018 the amount of the investments constituting 10 (ten) and more percent from issued shares (shares in the authorized capital) the legal entity, and the deferred tax assets recognized concerning deductible temporary differences does not exceed 15 (fifteen) percent from fixed capital of bank, after application of the regulatory adjustments specified in item 4 of this Instruction;

2) from the added capital:

if investments of bank into financial instruments of the financial organizations in which the bank has less than 10 (ten) percent of issued shares (shares in the authorized capital) in total exceed 10 (ten) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the exceeding amount increased by share of investments into termless financial instruments in the total amount of investments is deductible from the added capital;

investments of bank into termless financial instruments of the financial organizations in which the bank has 10 (ten) and more percent from issued shares (shares in the authorized capital) are deductible from the added capital.

If the amount of the added capital is insufficient for implementation of deduction, then the amount is subtracted from fixed capital of bank;

3) from the capital of the second level:

if investments of bank into financial instruments of the financial organizations in which the bank has less than 10 (ten) percent of issued shares (shares in the authorized capital) in total exceed 10 (ten) percent from fixed capital of bank after application of the regulatory adjustments specified in item 4 of this Instruction, the exceeding amount increased by share of investments into subordinated debt in the total amount of investments is deductible from the capital of the second level;

investments of bank into subordinated debt of the financial organizations, in which the bank has 10 (ten) and more percent from issued shares (shares in the authorized capital), of the legal entity, is deductible from the capital of the second level.

If the capital sum of the second level is insufficient for implementation of deduction, then the amount is subtracted from the capital of the first level of bank.

Investments, not deductible at the rate of equity, are weighed on degree of credit risk according to appendix 1 to this Instruction.";

5, 6 and 7 to exclude Items;

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