Kazkom-BTA merger may produce largest universal bank in region
July 07. Tengrinews
Writing by Dinara Urazova, editing by Tatyana Kuzmina
Kazakhstan’s largest bank Kazkommertsbank (also known as KKB or Kazkom) and Kazakh businessman Kenes Rakishev have completed the acquisition of BTA Bank from Samruk Kazyna National Wealth Fund, Tengrinews reports citing the press service of KKB.
Previously 58% in BTA bank was held by a group of Kazakh businessmen led by infamous Mukhtar Ablyazov, who chaired the bank from 2005 to 2009. During this period, the bank grew rapidly, but its growth in loans was not matched by an equivalent growth in deposits. In 2003-2007, BTA’s outstanding loans grew by 1,100% and by 2007 its loans to deposits ratio made 3.6 to 1. In 2009 Mukhtar Abliyazov fled to Britain after falling under suspicions of embezzling money from the bank. The bank defaulted the same year. Ablyazov is currently awaiting trial in Lyon, France. He is accused of embezzling $6 billion from BTA.
The Wealth Fund got hold of 75.1% in BTA bank back in February 2009 when the latter defaulted on its obligations to its foreign creditors and had to be natoinalized by the Kazakh Government to save it from a complete failure. The fund had to inject billions of dollars to keep the bank afloat. After two subsequent restructurings of the bank’s debt, Samruk-Kazyna Fund increased its share to 97.3%.
BTA was put on sale because the nationalization and the injection of funds by Samruk Kazyna into the bank was a temporary anti-crisis measure.
By finalizing the deal on Frinday, July 4, Kenes Rakishev and Kazkom purchased 46.5% equity stakes in BTA Bank each. This acquisition left Samruk Kazyna fund with 4.3% in the bank, but the fund transferred this stake to KKB under a trust agreement as part of the deal. This provided KKB with more than 50% of the voting shares and the operational control over BTA bank.
“Today we have turned the page not only in the history of the country’s oldest financial institution – BTA Bank – but in the banking sector as a whole. This transaction drew a logical end to the extensive crisis aid package, which the government was forced to provide to rescue and stabilize the banking system of Kazakhstan. Time has proved that this decision was correct. I am glad that the fate of BTA Bank is ultimately in the hands of domestic investors and I am certain that the new shareholders will make every effort to ensure that in the future the bank uses only best banking practices and experience. I thank all the BTA customers for their patience and support,” Kenes Rakishev declared.
According to the press service of KKB, merging BTA into Kazakom could produce the largest universal bank in Kazakhstan. Nina Zhussupova, CEO of KKB said: “This is a transformational transaction for KKB. The acquisition and subsequent merger of BTA and KKB are expected to create the largest universal bank in the region, creating a large-scale diversified institution with assets 1.5x larger than those of its closest competitor. The merger combined with KKB’s proven ability to collect debts should also enhance the recovery of troubled BTA assets. Generally, we expect that the merger will make the banking system in Kazakhstan healthier and help the bank regain market confidence”.
According to Kazkom, the cost of acquiring 46.5 percent in BTA bank made 72.1 billion tenge ($392.85 million).