BTA Bank May Sell Retail Unit to Kazakhstan Fund, CEO Says

Aug. 26. Bloomberg

By Laura Cochrane

BTA Bank May Sell Retail Unit to Kazakhstan Fund, CEO SaysBTA Bank, Kazakhstan’s largest lender which in April underwent the biggest emerging-market corporate default during the financial crisis, may sell assets including retail unit Temirbank to majority shareholder Samruk- Kazyna as part of its $12 billion debt restructuring.

“We have had talks with Samruk-Kazyna on Temirbank and these discussions are ongoing,” Anvar Saidenov, chief executive officer, said in a phone interview. The bank would welcome interest from other financial institutions, he said.

BTA, one of three Kazakh banks to default this year, is trying to raise cash to repay creditors and cover expected losses on non-performing loans in what Commerzbank AG called the biggest emerging-market corporate default since the financial crisis began in 2007. BTA will deliver restructuring options to bond holders from Sept. 2 to 4, a plan that is 80-90 percent completed, Saidenov said.

Government-owned National Wellbeing Fund Samruk-Kazyna bought a controlling 75.1 percent stake in BTA in February.

“Temirbank is a retail franchise with a considerable share of the market in Kazakhstan, but on the other hand BTA has its own retail portfolio and there is a certain overlapping in that sense,” Saidenov said in the interview from Almaty yesterday.

BTA stopped making principal payments on its debt in April after creditors demanded immediate repayment. It ceased paying interest last month and proposed offering $1 billion to buy back debt as part of its options to bond holders.

Overpriced Security

Most of BTA’s existing loan security is “several times overpriced against real values” and its investment decisions in the past have been “above market valuations, even at boom times,” according to a presentation to investors on Aug. 18. It will shut branches and cut staff as part of the restructure, the bank said in the presentation.

Kazakhstan plans to introduce a law allow restructuring banks to separate their “good” assets and liabilities and transfer them either to another lender or a “specialized stabilization bank,” White & Case LLC, which is drafting the legislation with Kazakhstan’s Financial Markets Supervisory Agency, said in an e-mailed statement last week.

“The notion of a stabilization bank I think could help because it is better to have more options,” Saidenov said, adding that BTA has no plans to segregate out troubled assets. “They will remain within the bank and on the balance sheet.”