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INTERVIEW -Kazakh wealth fund eyes $4 bln bond restructuring, bank mergers
April 1, 2014 / 6:31 AM / 4 years ago

INTERVIEW -Kazakh wealth fund eyes $4 bln bond restructuring, bank mergers

ASTANA, April 1 (Reuters) - Kazakhstan’s sovereign wealth fund Samruk-Kazyna, which bailed out several local banks during the global financial crisis, says the high cost of debt servicing has hastened its plans to restructure bonds worth $4 billion it issued as financial aid to two Kazakh lenders.

In an interview with Reuters, deputy Samruk-Kazyna head Yelena Bakhmutova also reiterated plans for the state to exit its investments before the end of this year in the banks which it rescued during the crisis.

BTA Bank, the country’s third-largest lender by assets, and Alliance Bank, the eighth-largest, were among the five Kazakh banks, in which the state acquired majority or large minority stakes in return for replenishing their liquidity.

Samruk-Kazyna still holds 97.3 percent in BTA and 67.0 percent in Alliance.

In 2009, Samruk-Kazyna issued “the anti-crisis bonds”, worth 750 billion tenge ($4 billion) and maturing in December 2024, to prop up the two banks.

Samruk-Kazyna makes coupon payments on these bonds worth 45 billion tenge ($247 million) a year.

“We see this level of debt servicing as burdensome for us,” Bakhmutova said. “We may transfer these papers to the open market ... We are considering various options.”

“We have started discussing the restructuring (of the bonds), but our actions should have no negative effect on the banks’ capital,” Bakhmutova said. She gave no further details.

The banking sector of the oil-producing Central Asian nation of 17 million was among the first and hardest hit by the global crisis owing to its overexposure to external borrowing and the bloated real estate market.

Several planned mergers are expected to create stronger banks and consolidate the banking sector still burdened by a large proportion of non-performing loans.

“It would be more reasonable, if private banks’ assets did not contain a significant volume of Samruk’s bonds,” Bakhmutova said in a reference to BTA’s and Alliance’s expected change of status when their planned mergers conclude. “We would not like to depend to such a degree on the banks which we no longer control.”


Kazkommertsbank , Kazakhstan’s largest bank by assets, is set to buy BTA Bank jointly with Kazakh businessman Kenes Rakishev for about $1 billion. They will each own a 46.5 percent stake in BTA.

If Kazkommertsbank shareholders do not exercise their option of buying out a 21.2 percent stake still held by the state, Samruk-Kazyna will own less than 20 percent in the future united bank, Bakhmutova said.

“We have no intention to take part in the operational activity of the bank, but we have a possibility to sell our share in the united bank - including on the market,” she said.

Samruk-Kazyna said in October it had agreed with Kazakh billionaire Bolat Utemuratov on his acqusition of a mintority stake in Alliance Bank and a 79.9 percent state-owned stake in Temirbank, the 12th largest Kazakh bank which was also nationalised during the crisis.

Utemuratov, with a fortune estimated by Forbes magazine at $2.2 billion and with interests spreading from the financial sector to non-ferrous metallurgy, owns ForteBank, rated 28th among Kazakhstan’s 38 banks.

He plans to merge his banking assets after buying a state-held stake in Alliance and a whole state stake in Temirbank.

“We expect the transaction to be finalised in the first two weeks of April ... 16 percent of shares in Alliance Bank and all (state-held) shares in Temirbank will be sold,” Bakhmutova said.

“If this merger happens, will we sell our shares (in the united bank) and get cash,” she said.

In January, Alliance Bank set out terms for its second debt restructuring after the global crisis.

It said its proposals applied to debts worth around 127.3 billion tenge ($700 million) and would involve lenders agreeing to take substantial “haircuts” or losses on their investments, and it hoped to complete talks with investors by June.

On Monday, Fitch Ratings downgraded Alliance Bank’s long-term issuer default Ratings to ‘RD’ (Restricted Default) from ‘C’, citing “an uncured default” on its senior debt obligations, following the failure to pay a coupon due on 25 March. (Writing by Dmitry Solovyov; Editing by Shri Navaratnam)

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