Kazakh Tenge ‘Lies’ Must Be Punished, Marchenko Says

July 15. Bloomberg

By Nariman Gizitdinov

Kazakh Tenge ‘Lies’ Must Be Punished, Marchenko SaysKazakhstan central bank Governor Grigori Marchenko said there will be no devaluation of the tenge this year and bankers who fueled speculation of a currency slump must be punished.

“We had, have and will have the same position: there will be no devaluation this year,” Marchenko told reporters in Almaty, dismissing rumors of a devaluation as a “lie.”

Kazakhstan has defended the tenge since its 21 percent devaluation in February even as the central Asian nation’s financial crisis forced the government to seize control of BTA Bank, the biggest lender, and spend more than $5 billion to prop up the economy and banking system. BTA is in default on as much as $15 billion and Alliance Bank, the fourth largest lender, is restructuring $4.19 billion.

Marchenko said bankers at ATF Bank, a unit of UniCredit SpA, Halyk Savings Bank, Kazakhstan’s third-largest lender, and Eurasian Bank had advised clients to buy dollars.

“Clients of these banks called us, and we told them there will be no devaluation, but we think the managers in these banks must be punished by these banks, said Marchenko.

Elvira Peltola, a spokeswoman for ATF Bank, and Bagdat Kodzhakhmetov, a spokesman for London-traded Halyk Savings Bank, both based in Almaty, declined to provide any immediate comment.

“Eurasian Bank can’t comment on the contradictory and unsupported” information, said spokesman Mikhail Yegorin in Almaty.

Bank Probes

Kazakhstan’s Agency for Financial Supervision ousted Zhomart Yertayev as chief executive officer of Eurasian Bank on July 3 because of his role in losses at London-listed Alliance Bank, where he was CEO from 2002 to 2007. Yertayev has said he will contest his removal.

Marchenko was the chief executive officer at Halyk Savings Bank until his appointment to the central bank in January.

Kazakh prosecutors said yesterday 12 executives from BTA and its Temirbank unit and some corporate clients were charged with the alleged embezzlement of more than 83 billion tenge ($550 million). BTA Chairman Mukhtar Ablyazov and Deputy Chief Executive Officer Zhaksylyk Zharimbetov are being investigated along with 12 more suspects, the prosecutors said. Ablyazov said in April that the charges against him in an international arrest warrant issued March are “fabricated.”

Restoring Trust

“It’s important, if there were frauds in BTA and Alliance bank the responsible managers must be punished to draw the line between the banks’ past and future,” Marchenko said. “If the managers go unpunished it will be difficult to restore trust in the banks.”

Kazakhstan, which holds 3.2 percent of the world’s oil reserves according to BP Plc, devalued the tenge on Feb. 4 after crude prices dropped by two-thirds in six months. Oil has climbed about 50 percent since then.

Kazakhstan published a law on July 11 that will allow President Nursultan Nazarbayev to force individuals and companies to sell foreign currency to the government and deposit a portion of any transaction with an authorized bank. The “special exchange-rate regime” will be enacted 30 days after the publication.

Investors increased trading of dollars six-fold to $278 million today compared with July 13, the Kazakhstan Stock Exchange said on its Web site.

The tenge rose to 150.80 per dollar as of 6:07 p.m. in Almaty.

The central bank has enough currency reserves to defend the tenge, said Vladimir Osakovsky, an economist for UniCredit in Moscow.

Marchenko pledged to keep the tenge at about 150 per dollar for the rest of the year.

“At some point we can return to the sales of dollars to individuals via the central bank’s units, as we did in 1993” to cut speculation, he said.