Kazakhstan’s BTA poised for debt deal

15/05/2010 | Sarah White

The chairman of Kazakhstan’s BTA Bank expects to gain support from creditors in a crucial vote at the end of May to finally seal its debt restructuring

The chairman of Kazakhstan’s BTA Bank expects to gain support from creditors in a crucial vote at the end of May to finally seal its debt restructuring.

This would be the last step in a push by the country’s banks to move on from a deep financial crisis which has paralysed the sector since mid-2007.

Anvar Saidenov, chairman of the management board of BTA Bank, which was bailed out by sovereign wealth fund Samruk-Kazyna last year, told Emerging Markets there was “no 100% guarantee” of approval, but he was confident the restructuring plan would be passed on May 28 by the two-thirds of creditors needed, marking the last of Kazakhstan’s bank restructurings.

But a full recovery of the sector will also entail a big revamp of lenders’ business strategy if a second crisis is to be avoided in the coming years, analysts and ratings agencies warned.

Andrey Markov, from Renaissance Capital, said banks have to dissociate themselves from the real estate sector and move away from a wholesale funding model to a deposit-based one. But he added that the only sector where loans had grown in the last year was in real estate.

“There are few other sectors to lend to, as oil and gas and metals and mining companies can fund themselves internationally at cheap rates,” he said, adding that “in several years we could be faced with the same picture.”

Standard & Poor’s also highlighted recently that a new funding model was key to the recovery of Kazakhstan’s banking system, which is still being plagued by non-performing loans. Saidenov insisted the bank would implement a new business plan that would see it make a push to gain retail deposits and lend to small- and medium-sized enterprises.

Saidenov added that BTA would focus on the domestic market rather than on expanding in the CIS and lending to offshore clients.

He said the bank wanted be to “take part in government programmes”, adding that the state would be a “main sources of funds.” Other initiatives, such as the creation of a special account to gather payments to trade finance creditors, which could then be used by BTA as a revolving trade finance facility, would also allow the bank to remain engaged with this segment of lending. The facility would amount of $700 million, Saidenov said.

He added he was “realistic” about international borrowing opportunities following the restructuring, and that this was not a priority. However, other Kazakh banks, including Kazkommertsbank, Halyk Bank, Nurbank, and even Alliance Bank, which completed its own restructuring last year, are already understood to be eyeing the markets.

BTA’s restructuring, begun over a year ago, will reduce BTA’s debt burden to just under $5 billion, from $11 billion. It has already been approved by the restructuring steering committee, which account for about 40% of the debt, and should be easily passed, bank and institutional lenders involved told Emerging Markets.

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