Kazkommertsbank, Halyk Need to Restructure Debt on Their Own

May 20. Bloomberg

By Nariman Gizitdinov and Denis Maternovsky

Kazkommertsbank and Halyk Savings Bank, Kazakhstan’s second- and third-largest lenders by assets, will have to restructure their debt themselves, the head of the Kazakh government holding company said.

“The responsibility of servicing external debt lies with the management of Kazkommertsbank and Halyk,” Kairat Kelimbetov, head of the National Wellbeing Fund Samruk-Kazyna, told reporters in Almaty today. The state controls 21 percent each of Kazkommertsbank and Halyk.

Almaty-based BTA Bank, the country’s biggest bank, and Alliance Bank, the fourth-biggest, already are in talks to restructure debt after defaulting on their borrowings as Kazakhstan slides into its first economic contraction in a decade. Astana Finance, a lender also partly owned by the state, said yesterday it stopped paying interest and principal on its dollar bonds, becoming the third Kazakh bank to default since April 13.

The talks with holders of BTA and Alliance debt are helping create the “groundwork for dialogue” with debt holders, Kelimbetov said. The government is waiting for debt restructuring talks to be completed before it decides on providing BTA with more capital, he said.

President Nursultan Nazarbayev’s government has spent more than 734 billion tenge ($4.9 billion) to support banks and businesses since the economic slowdown began in 2007, including the February takeover of BTA.

“If the negotiations to restructure the debt of BTA and Alliance Bank are successful, Kazkommertsbank and Halyk may follow,”, Nurlan Smagulov, a member of the government’s anti- crisis council, said on May 18.

Kazakh banks’ provisions against bad loans may reach as much as 4 trillion tenge, or 25 percent of GDP, this year, according to estimates by the National Business Forum, a discussion group set up to help improve anti-crisis measures.

Nariman Gizitdinov in Almaty at ngizitdinov@bloomberg.net; Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net