(SRI) - The Financial Supervision Agency (FSA), Kazakhstan’s financial regulator, has warned the country’s banks against offering excessively high rates on deposits saying they created new risks.
In a time when international capital markets are as good as closed to most Kazakh banks, many of them have turned to deposits as their key source of funding. Some banks are offering rates of up to about 14 percent on deposits in the local tenge currency.
However, according to the FSA said some banks offered rates “at a level, having no justifiable economic basis”.
“Raising deposit rates by banks […] may increase their credit risk, which is tied to rising lending rates, or affect the interest margin, putting pressure on capital,” it said.
The agency said it was concerned with the trend and urged banks to pursue “conservative” and “intelligent” rate-setting policies.
In early June, the chairman of the National Bank of Kazakhstan Grigoriy Marchenko, also cautioned of possible liquidity problems at three Kazakh banks, manifested in excessively aggressive marketing, including deposit rates of more than 14 percent.
Neither the AFN nor Marchenko named the banks in question.
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