On the Transfer of a Portion of JSC KDIF (Republic of Kazakhstan) Assets to Private Asset Management Companies for Trust Management

The National Bank of the Republic of Kazakhstan (hereinafter – NBK) announces the start of the process of transferring assets of JSC “Kazakhstan Deposit Insurance Fund” (hereinafter – KDIF) to private asset management companies for trust management. The transfer of funds is being carried out as part of the NBK’s strategy to develop the securities market and gradually move away from managing the assets of its subsidiary organizations.

A ceremony was held in Almaty to sign the relevant agreement with representatives of several asset management companies.

At a press conference following the signing of the agreement, KDIF Chairman Adil Utembayev spoke about the measures being taken to ensure the safety of the transferred assets.

“We have assessed the risks and developed an investment policy for the private companies, according to which investments will be made only in reliable financial instruments, such as government securities of the Republic of Kazakhstan, bonds of quasi-sovereign sector entities and international financial organizations with a maturity of up to three years, as well as reverse REPO operations. We expect that this program will increase the return on assets. I want to note that the main task for the Fund is to preserve the funds of the special reserve and maintain their high liquidity.”

Adil Utembayev, Chairman of the KDIF

According to him, the managers are tasked with exceeding the return of a set benchmark portfolio. If risks arise, the contract provides KDIF with the option of unilateral termination. When transferring assets to private managers, risks will also be minimized through additional supervision by custodians, who ensure the accounting and storage of assets, as well as monitor the private managers’ compliance with the investment policy requirements.

In turn, Nurzhan Tursunkhanov, Director of the Monetary Operations Department of the NBK, noted that at the initiative of the NBK, a government securities index was developed and launched on the Kazakhstan Stock Exchange platform for the purpose of index-based management of KDIF’s assets.

“We have done a great deal of work together with the KDIF and the Kazakhstan Stock Exchange, and today, without exaggeration, we are on the threshold of a historic moment. For the first time in Kazakhstan, the widely used international practice of an index-based approach will be applied to the assets of a major institutional investor, KDIF, but it will be based specifically on a local benchmark introduced at the Kazakhstan Stock Exchange. The transfer of assets will give a significant impetus to the domestic securities market, promote the development of the private asset management market by increasing assets under management, and enhance the management efficiency of the transferred assets through increased competition among managers.”

Nurzhan Tursunkhanov, Director of the Monetary Operations Department of the NBK

As a reminder, as of today, the size of KDIF’s special reserve assets is 1.3 trillion tenge. At the initial stage, 200 billion tenge will be transferred. Further transfer of assets will be carried out in stages, depending on the performance indicators of the private asset management companies.