We refer to the recent press reports about the decision of the National Bank of Kazakhstan regarding suspension of the license of “Al Hilal” Islamic Bank” JSC (hereinafter – the Bank) to the extent of receiving interest-free demand deposits from individuals and opening bank accounts for individuals.
At the outset we would like to clarify that this decision applies only to the opening of new accounts for individuals and does not affect any transactions with our existing corporate customers.
The reason for the National Bank decision was because the Bank did not fully comply with the regulations regarding minimum shareholder equity. Resolution No140 of FMSC stated that all second tier banks should have a minimum equity of 10 billion tenge. The Bank’s Sole Shareholder injected 10 billion tenge as shareholders equity. Our current own capital stands at 9.5 billion tenge. The reason for the shortfall of equity capital is due to operating losses accumulated in the first year of the Bank’s activities. These operating losses were the result of costs associated with the integration of Islamic banking products into Kazakhstan’s business practices.
In the light of the above circumstances the Bank’s Sole Shareholder decided to increase the capital to meet the requirements as stipulated by FMSC resolution No140.
Even with the current capital requirements the Bank is one of the most stable financial institutions in the Kazakhstani market with regard to capital adequacy, liquidity and quality of investment portfolio. The balances in the National Bank and other banks as of August 1, 2011 are 8.1 billion tenge, which is 78% of total assets, whereas the liabilities to customers do not exceed 1.2 billion tenge. According to FMSC NBK as of July 1, 2011 the Bank’s capital adequacy ratio (k1-1) is 0.962 and capital adequacy ratio (k1-2) is 2.405, which represents one of the highest ratios in Kazakhstan’s banking sector.
The Bank’s customers represent the best corporations and companies of Kazakhstan. At present time the Bank does not have impairment losses on investment portfolio, which is a further indicator of the quality of the portfolio.
The Bank is committed to full compliance with the regulatory requirements of the Republic of Kazakhstan and will continue to spearhead efforts to raise the profile of Islamic Finance in the Republic of Kazakhstan and the CIS.
The Sole Shareholder of the Bank is Al Hilal Bank PJSC, which belongs to the Government of Abu Dhabi. The Bank operates in accordance with the intergovernmental agreement signed between the governments of the Republic of Kazakhstan and Abu Dhabi. The Bank’s Sole Shareholder unconditionally supports the Bank in terms of capitalization and fully committed to ensuring compliance with other legislative and regulatory requirements of the Republic of Kazakhstan.
Source: “Al Hilal” Islamic Bank” JSC Kazakhstan Head Office
[2011-08-16]
Сообщение отредактировал eug: 16 August 2011 - 12:49
