1. Laws and Regulations of the Republic of Kazakhstan in the bank liquidation process 2. The Temporary Administration 3. The Liquidation Commission 4. The Creditor Committee 5. The enhanced Financial Sector Development Concept

 Law “On compulsory insurance of deposits placed with the second-tier banks of the Republic of Kazakhstan”  Law “On banks and banking activity”  Regulatory legal acts of the regulatory authority, including:  The Rules of appointment of, and the mandate of the temporary administration (temporary administrator) of a second-tier bank  The Rules on putting the second-tier banks in conservatorship and conduct of purchase-and-assumption transction by the temporary administration  The Rules for appointment of, and discharge from duties of the temporary administration of a second-tier bank in forced liquidation following ruling of court, and on setting the requirements for the chairperson and members of liquidation commission positions  The Rules for forced liquidation of second-tier banks in the Republic of Kazakhstan  The Rules for establishment and operation of bridge bank  The Rules for extending loans for, or placing deposits with the second-tier bank being receiver for the insured deposit-related obligations by the deposit insurance organization

KDIF TEMPORARY ADMINISTRATION UPON WITHROWAL OF BANK LICENSE IN CONSERATORSHIP LIQUIDATION COMMISSION CREDITORS’ COMMITTEE

Appointment of the temporary administration by the regulatory authority Early prevention measures + corrective actions Sanctions Withdrawal of of license Conservatorship either

THE BANKS IN LIQUIDATIONKomirbank Commencing2002Ending2009 Nauryz Bank Commencing 2005 In process of completion Valut Tranzit Bank Commencing 2007 in progress in progress

NameReimbursement payable to the insured depositors by the KDIF (in million tenge) Settled claims of the KDIF to the liquidation commissions Unsettled claims of the KDIF to the liquidation commissions In million tenge % % Komirbank1, Nauryz Bank ,48892,612 Valut Tranzit Bank , ,43 THE BANKS IN LIQUIDATION

* The temporary administration is the authority which is appointed to provide for security of properties and conduct administration over the organization. * The TA is appointed by the regulatory authority for the period commencing the effective date of withdrawal of license and up to the date of assigning the liquidation commission. * Within the period of operation, the TA shall not be entitled to conduct debit operations or make amendments into the terms and conditions of the agreements being entered into earlier by the bank.

* In its actions the Temporary Administration is dedicated to retaining of, or recovery of the bank’s capacity to fulfill its obligations, redress of any discrepancies in operations and failures to comply with the effective legislation, as well to take other actions aiming at restoring financial health of the bank, protection of rights and lawful interests of the consumers of financial services in scope as provided by the bank, and enhancement of the risk management and internal controls systems. * The conservatorship regime application shall be limited to 1 year period. * The conservatorship plan in drawn by the TA. * The TA has the authority to make decisions in regard to the bank’s operations at its own discretion. All decisions shall be made by simple majority vote.

creates the database of the insured deposits placed with the bank, conducts interim calculation of the amounts of reimbursement payable to the insured depositors, takes participation in conducting purchase-and-assumption transaction, fulfills other functions as established with the resolution of assigning duties;

in putting the bank into conservatorship, conducts control over the deposit base, and as deems necessary applies to the Temporary administration for suspension of the obligations of the bank in regard to the accepted deposits in full or in part thereof. The Temporary Administration shall make decisions concerning all issues of operation of the bank with consideration of control by the regulatory authority. All decisions shall be made by simple majority vote.

The liquidation commission is the authority which is appointed in case of making decision on forced liquidation of the bank which shall be responsible for administration of the properties and business of the bank in forced liquidation dedicated to closure of the bank’s businesses and settlement the bank’s obligations towards its creditors. The Liquidation Commission Chairperson shall make decisions concerning liquidation of the bank at his (her) own discretion. The KDIF shall be a party of the liquidation commission and the creditor committee up to the date when the KDIF’s claims are settled. The claims of the KDIF shall be settled in the 3rd sequence in compliance with the creditor claims register.

makes a list of insured depositors at the date when the ruling of court becomes effective, Calculates set-off of the claims in a case if the depositor and borrower being one person, calculates the insured deposits reimbursement at the date when the ruling of court on forced liquidation of a bank becomes effective, fulfills other functions as established with the resolution of assigning duties;

The Creditor Committee is the authority called from among the creditors of the bank in liquidation with the aim to safeguard the rights and lawful interests of the creditors and making decisions provided their participation. The mandate and powers: Inspection of all documents being created in the process of liquidation of the bank, Taking part in consideration of complaints of the creditors that their rights and lawful interests were compromised, Delivery of information to the regulatory authority and the court about breaching the rights and lawful interests of the creditors or failure to comply with the legislation of the Republic of Kazakhstan in the process of forced liquidation of the bank, including non-fulfillment or improper fulfillment by the Liquidation Commission Chairperson and (or) members of their respective duties.

obtaining information on financial position of the bank in liquidation from the liquidation commission, Approval of the uncollectible accounts receivable of the bank in liquidation, Approval of the realization schedule for liquidation and auction properties being delivered by the liquidation commission, Approval of the liquidation budget estimates, Approval of the property write-off statement by the liquidation commission, Applying to the court and the regulatory authority on the actions taken by the liquidation commission.

Approval of the decision by the Liquidation Commission Chairperson to lease out the property of the bank in liquidation, and the tender documentation thereto, Approval of the decision by the Liquidation Commission Chairperson on transfer of property by a debtor of the bank in liquidation to settle the accounts payable, including following the respective ruling of court, Approval of the decision made by the Liquidation Commission Chairperson in regard to the property accepted by the Liquidation Commission in enforcement proceedings as reimbursement of losses.

In conducting purchase-and-assumption transaction, the KDIF at the expense of its special reserve for payouts has the right to extend a loan or place a funds deposit with the bank being the receiver for the insured deposits-related obligations, with the view to ensure timely fulfillment by this bank of its respective obligations associated with administration of the deposits of the bank. The amount of the loan or funds deposit shall not exceed the amount of the obligations related to the accepted deposits.

The KDIF has the right to extend the loan to the bank in National currency for the period up to 3 years, Interest rate on the loan being extended shall not exceed the official refinancing rate of the National (Central) Bank of the Republic of Kazakhstan as effective at the date of signing the loan agreement. The loan shall be extended provided that guarantee for fulfillment of obligations is delivered in the form of encumbrance or a bank guarantee. The funds deposit may be placed either in the National currency or in foreign currency for the period not exceeding 3 years.

By Resolution of President of the Republic of Kazakhstan No. 923 dated 01 Feb., 2010 the Financial Sector Development Concept in the post-crisis period was approved. The Action Plan for realization of the Concept is ratified by the Resolution No. 409 dated 13 May, Following the initiative of the National Bank of the Republic of Kazakhstan, the conceptual document Enhancing the Mechanisms for Liquidation and Improvement of Financial Position of the Kazakhstani banks was developed. The key objective of the Concept is ensuring stability of financial sector in the Republic of Kazakhstan via improvement of the effective legislation in part of resolution and liquidation of financial organizations. The Concept is dedicated to: Protecting the rights and lawful interests of the depositors and creditors, Ensuring minimization of expenses associated with conducting actions to strengthen financial position of, and resolution of problem financial institutions, Transferring the recovery, resolution and liquidation functions in regard to financial institutions to the KDIF from the National Bank of the Republic of Kazakhstan.

Thank you for your attention!