The Kazakhstan government is scouting for a bank that can take over struggling lender Tsesnabank and prevent it from collapsing, Reuters has reported.
The government and the central bank of the country have approached at least three other domestic lenders in the country to carry out a deal next month, unnamed sources told the news agency.
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Tsesnabank merger: Background
One of the largest banks in the country, Tsesnabank holds more than $1bn in retail deposits. Distressed with a growing number of bad loans, the bank now requires a tie-up or a takeover to avoid dissolution.
A government bailout was ruled out by the authorities due to its poor balance sheet, the report added citing the sources.
Accordingly, the authorities are now exploring potential mergers to rescue Tsesnabank.
However, spokespersons of the central bank, the government and Tsesnabank did not confirm the development.
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By GlobalDataRecently, the state-owned Non-Performing Loan Fund (NPLF) announced the plan to sell $1.59bn worth of domestic bonds next week. The funds will be used to buy assets from Tsesnabank.
One of the sources told Reuters that the NPLF-move is aimed to make potential merger feasible for the acquirer.
Besides reducing the liabilities of the troubled lender, the government is also expected to offer financial assistance to the prospective buyers.
In September last year, the central bank of the country awarded a KZT150bn ($407m) loan support to Tsesnabank. Later, the support was increased to KZT200bn.
