Kazakh Wealth Fund ‘Certainly’ Ready to Support BTA, Chief Says

Oct. 4. Bloomberg

Kazakh Wealth Fund ‘Certainly’ Ready to Support BTA, Chief SaysSamruk-Kazyna, the Kazakh sovereign wealth fund that took over BTA Bank after its 2009 default, is ready to provide more state aid if the troubled lender requires financing, said Timur Kulibayev, the fund’s chairman.

“BTA Bank will certainly be supported by the government,” Kulibayev said today in an interview in the Kazakh capital, Astana, without elaborating. Kazakhstan injected 883 billion tenge ($6 billion) to raise BTA’s equity capital in 2009 and 2010, the equivalent of about 4 percent of gross domestic product, to bail out the bank.

Samruk-Kazyna took over what was then the nation’s biggest lender in February 2009 when credit markets froze and Kazakhstan’s property bubble burst. The bank defaulted on $12 billion of debt two months later before winning 92 percent creditor approval of a restructuring plan in May 2010. The state holds an 81.5 percent stake in BTA.

While BTA hasn’t asked Samruk-Kazyna for additional capital, it’s seeking to cut the cost of state funding made available to the lender and increase the interest payments it gets on the wealth fund’s notes used as collateral in repo agreements with the central bank, Chairman Anvar Saidenov said in a Sept. 1 interview.

The lender’s capital shortfall under international accounting standards widened to 73 billion tenge in August, an increase of 83 percent from the previous month, the Kazakh central bank said Sept. 26.

The bank in July had a capital surplus of 314 billion tenge in accordance with domestic regulations, Saidenov said. BTA maintained positive capital under domestic standards as of Sept. 1, according to the Almaty-based bank.

BTA has enough liquidity to service its debt for a year “at a minimum,” Deputy Chief Executive Officer Berik Otemurat said Sept. 1. The bank on Sept. 30 paid the second $175 million installment of a revolving loan that was part of the 2010 restructuring agreement.

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