Kazakhstan’s Alliance Bank says completes debt restructuring

Nov 19. Reuters. ALMATY

By Mariya Gordeyeva

Kazakhstan's Alliance Bank says completes debt restructuringKazakhstan’s Alliance Bank has completed a $1.2 billion debt restructuring and the country’s sovereign wealth fund will put 220 billion tenge ($1.2 billion) of special deposits into the bank to support the deal, Alliance’s chief executive said on Wednesday.

Alliance Bank next plans to merge with two other Kazakh banks, Temirbank and ForteBank, controlled by Kazakh billionaire Bolat Utemuratov, also a minority stake holder in Alliance, a process which will lead to a number of job losses.

The restructuring, Alliance’s second in four years, will be achieved by the cancellation or restructuring of all outstanding claims by its creditors, in return for which they will receive a combination of cash, shares in the combined bank and/or newly issued bonds with a principal amount of 43.5 billion tenge ($237 million), the bank said in a statement.

Sovereign wealth fund Samruk-Kazyna will support the restructuring through 10-year special term deposits with an aggregate nominal value of 220 billion tenge, CEO Timur Issatayev told Reuters.

Issatayev said the restructuring was approved by 90.51 percent of shareholders. He also said the bank’s debts will be cut to $600 million from $1.2 billion.

After the deal the wealth fund’s stake in the unified bank is expected to fall to less than 1 percent, Issatayev told Reuters in an interview last month.

After the merger, the combined bank will become the eighth-largest lender in Kazakhstan with a capital of around $900 million, Issatayev said on Wednesday. Alliance Bank is currently the 10th largest Kazakh lender by assets.

He said the combined group would be named Forte and said a large number of employees would be laid off.

Management was in the process of cutting 50 percent of the three banks’ total workforce of 6,000. “In the course of 2015 we are aiming for another 10 percent reduction in the workforce,” he said.

Kazakhstan’s banking sector came under severe pressure following the 2008 financial crisis, leading to the default of many large banks. Banks are still facing a high ratio of bad loans.