Kazakh Banks Expect More Loan Restructuring, Delays in Payments

August 3. Bloomberg

By Nariman Gizitdinov

More than half of Kazakhstan’s 38 banks expect to restructure more loans as delays in debt payment grow in the third quarter as the country’s economic slump deepens.

At least 55 percent of lenders surveyed by the central bank forecast an increase in loan extensions, the Almaty-based National Bank of Kazakhstan said today in a statement on its Web site. Thirty-seven percent said they expected collateral to deteriorate further, according to the survey.

Kazakh property prices plunged after international credit markets froze and the price of oil, the country’s main export, plunged last year. Kazakhstan’s economy will contract 2 percent this year, after averaging 10 percent growth from 2000 to 2007, the International Monetary Fund estimates.

The government spent 766.8 billion tenge ($5.1 billion) to prop up its banking system and economy through July 20. Creditors of BTA Bank, the country’s largest lender, may lose as much as 97 percent of their investment as the bank restructures its debts, BTA said last month.

The 11 Kazakh lenders that borrowed the most abroad plan to sell assets and cut lending to pay external debts, the central bank said, without naming the banks it surveyed. The banks control 76 percent of the banking system’s assets.

One unidentified lender, which holds 21 percent of Kazakh bank assets, said 70 percent to 80 percent of its debts will be paid by selling assets and cutting domestic lending, according to the central bank.

Another lender, which has 15.8 percent of total bank assets, plans to pay back all of its debts by selling stocks and bonds to domestic investors and taking in more deposits, the central bank said.

Kazakhstan’s 38 banks lost a collective 2.2 trillion tenge in the first half, the Financial Supervision Agency said on its Web site. Assets totaled 12.1 trillion tenge.

The assets of Kazkommertsbank, the country’s second-biggest bank, fell to 2.546 trillion tenge as of July 1. Assets of Halyk Savings Bank, the third-biggest, rose to 1.976 trillion tenge, the agency said.