* KKB to sell half of its assets to Problem Loans Fund
* Asset sale to take place before KKB's proposed takeover by
(Adds details from the statement, Fitch downgrade, context)
ALMATY, March 13 Kazkommertsbank
(KKB), Kazakhstan's biggest lender, will sell half of its assets
to a state-run 'bad bank' before its proposed takeover by Halyk
Bank, the country's central bank said on Monday.
Halyk - the Central Asian nation's No.2 bank by assets - and
KKB provisionally agreed to the takeover earlier this month. The
central bank said at the time that the authorities planned to
support the deal by helping KKB resolve bad loans.
Half of KKB's assets totalling $15.7 billion are tied up in
a single loan to BTA, a former bank that is now a distressed
asset management company. While BTA has so far missed no
repayments on that debt, the outlook is uncertain.
Boosting KKB's capital is a "basic condition" of the
proposed takeover and the central bank will, together with
Halyk, examine KKB's asset quality before the deal goes through,
the central bank said in a statement.
But even before the examination, the BTA loan needs to be
"separated" from KKB and the state-run 'bad bank', the Problem
Loans Fund, will act as the operator for that, Kazakhstan's
central bank added.
The former Soviet republic has struggled to recover from the
financial crisis of the late 2000s and its banking sector has
been beset by bad loans since the sharp slide in the price of
oil, Kazakhstan's main export.
Last month, the Kazakh authorities said they would inject 2
trillion tenge ($6.28 billion) into the Problem Loans Fund
(PLF), topping up its current capital of about $1 billion, in
order to buy bad loans from local banks.
Rating agency Fitch has downgraded KKB's viability rating to
'f' from 'ccc', saying the move "reflects Fitch's view that the
bank has failed and requires external support to address a
material capital shortfall".
"In Fitch's view, the planned large asset sale to the PLF
represents a de-facto recognition by the Kazakh authorities of
the scale of KKB's asset-quality and solvency problems," the
Together, KKB and Halyk account for 38 percent of Kazakh
banks' total assets - although that figure may drop after KKB
disposes of its bad loans.
($1 = 318.3900 tenge)
(Reporting by Mariya Gordeyeva, writing by Olzhas Auyezov;
Editing by Himani Sarkar)