FSA orders Astana Finance to cut stakes in subsidiaries

business and economy

FSA orders Astana Finance to cut stakes in subsidiaries

By SRI ⋅ November 24, 2009 ⋅

(SRI) - Kazakhstan’s Financial Supervision Agency (FSA) has ordered Astana Finance to decrease its stakes in its banking and insurance subsidiaries until it reaches a restructuring deal and boosts its regulatory capital, Reuters reported.

Astana Finance, which had reported a negative equity of $180 million as of June 30, was exempt from FSA capital adequacy requirements until November 15. Last week, however, the lender reported that it had failed to reach a deal with its domestic creditors and requested an extension of a deadline to submit the final debt restructuring plan until March 2010.

“Since the company has not met its obligations, the [FSA] insists that it gives up control over the subsidiary bank and insurance companies reducing its stake to less than 10 percent,” Reuters reported the FSA head Yelena Bakhmutova as saying. “The reduction can be achieved either by selling parts of stakes or temporarily handing them over to a trustee for no longer than 3-4 months.”

FSA reportedly provided Astana Finance with the order and is currently awaiting a response. Astana Finance did not give any indication how it plans to handle the FSA requirement.