Bloomberg News

Halyk CEO Urges Kazakhstan to Scrap BTA Debt Restructuring

April 03, 2012

Halyk Savings Bank (HSBK) is calling on the Kazakh government to abandon a planned debt restructuring of state-run BTA Bank (BTAS) and forbid the lender from attracting deposits, Chief Executive Officer Umut Shayakhmetova said.

“A horrible end is better than horror without end,” Shayakhmetova told reporters in Almaty today. “We understand that the more than $7 billion in state funds already invested in this bank won’t be recovered. Today another figure of $5 billion or more is mentioned. The question is whether it’s appropriate to spend $12 billion to support BTA, which isn’t now a systemically important bank.”

BTA failed to make an interest payment on its July 2018 dollar bonds in January. The country’s biggest bank before its default on $12 billion of debt in 2009 is seeking a deal with creditors on its second restructuring by September, according to a March 22 presentation published on its website.

The lender is losing its systemic importance to the Kazakh financial industry three years after its takeover by the state, central bank Chairman Grigori Marchenko said last month, adding that an agreement with creditors is “possible and necessary.”

Kazakh sovereign wealth fund Samruk-Kazyna took over BTA in February 2009. The Almaty-based lender accounted for 11 percent of Kazakh banking assets with 1.48 trillion tenge ($10 billion) as of March 1, down from a 24 percent share in January 2009, according to the central bank’s financial oversight committee website.

Attracting Deposits

“Why does the regulator still allow this bank, which has negative capital, continuing to post losses and is in default, to attract deposits, especially from households,” Shayakhmetova said. Under a “negative scenario,” the entire state deposit insurance fund of 248 billion tenge will be used to compensate BTA depositor losses at their current level, she said.

BTA’s capital shortfall may reach about $6 billion by the end of 2012, according to its presentation. The bank in January predicted the gap would reach $5.1 billion by the end of the year.

It held 238 billion tenge of Kazakh individual savings as of March 1, while Halyk had 584 billion tenge in deposits, according to central bank data. Halyk, the country’s largest lender by assets, is controlled by President Nursultan Nazarbayev’s daughter and son-in-law.

‘Most Effective Restructuring’

“The people who took part in the restructuring and were at one time in regulatory bodies, where perhaps they overlooked something, said it was the most effective restructuring, setting an example for the whole world banking community,” Shayakhmetova said. “Now they are again overseeing a restructuring and offer the same methods and problem solving.”

BTA Chairman Anvar Saidenov and Yelena Bakhmutova, the former head of the disbanded Agency for Financial Supervision and now a deputy chief executive officer at Samruk-Kazyna, didn’t immediately respond to e-mail messages seeking comment.

Shayakhmetova also said the government has been “inconsistent” in its management of Alliance Bank (ASBN) and Temirbank, which were brought under state control in 2009 and restructured their debt. The lenders may be merged, Bakhmutova said in February.

“It was announced that the restructuring was carried out to sell those banks” and “when the situation more or less stabilized, discussion shifted to a merger,” Shayakhmetova said. “There’s also the question of how effective a merger will be as opposed to a sale of these two more-or-less functioning banks.”

To contact the reporter on this story: Nariman Gizitdinov in Almaty at ngizitdinov@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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