The president of Kazakhstan has promised to put an end to state bailouts for the country’s troubled domestic lenders, but the head of the National Bank is now looking to raid pension pots to achieve the same end.

National Bank chairman Daniyar Akishev told the upper house of parliament on May 4 that second-tier banks may expect to receive more than $600 million out of the Single Accumulated Savings Fund, or ENPF in its Russian initials.

The National Bank intends to have the ENPF invest in bonds repayable in five years.

Akishev stressed, however, that there is no plan to return to the practice whereby “banks would received money disbursed by the ENPF in an opaque manner.”

“Any bank, before it comes for ENPF money, should clearly show and demonstrate that it can raise money on the market,” he told lawmakers in an explanation clearly intended to anticipate public criticism. 

President Nursultan Nazarbayev sent a ripple through the sector last month when he complained volubly about historic misuse of state bailout funds. Nazarbayev said that the government has spent more than $9 billion injecting liquidity into stressed banks and that the funds have not been returned to the state’s coffers. He then singled out specific banks for criticism, prompting savers there to rush for their deposits.

In a financial sector stabilization program launched last summer, the government bought up $1.2 billion worth of bonds from several big industry players — ATF Bank, Eurasian Bank, Tsesnabank and Bank CenterCredit.

Some other lenders had to be put on life support later. In the fall, RBK Bank was downgraded by international ratings agencies and duly found it was unable to cash out its increasingly panicked clients. The National Bank handed the bank $730 million to put it on an even keel.

Management of the state pensions fund is a highly contentious matter in Kazakhstan. There was much indignation around this time last year, when it emerged that the ENPF had sunk around 70 billion tenge ($224 million) into the International Bank of Azerbaijan. That company eventually went bust, but Azerbaijan’s government has since pledged to sort out of the mess and pay back its liabilities, although only by 2032. 

Such cavalier investment appears to have been the norm.

When economist Rahmon Oshakbayev conducted an analysis of the pension fund’s investments last, he found that at least 23 percent of its portfolio was in high-risk plays.