BTA’s Temirbank Becomes Fourth Kazakh Bank to Default This Year

Nov. 23. Bloomberg

By Nariman Gizitdinov

BTA’s Temirbank Becomes Fourth Kazakh Bank to Default This YearTemirbank, a unit of Kazakhstan’s BTA Bank, said it won’t make interest or principal payments as it seeks to restructure debts after becoming the fourth Kazakh lender to default this year.

Temirbank followed its parent into default when it missed debt payments on Nov. 6 and Nov. 9, according to a statement released today on the U.K.’s Regulatory News Service. The National Welfare Fund Samruk-Kazyna will provide equity and become Temirbank’s majority shareholder after the restructuring is complete, the company said.

The default followed the “substantial deterioration” of Temirbank’s loan holdings, which pushed regulatory capital below the required minimum and could have cost the bank its license, according to the statement. BTA Bank, Alliance Bank and AO Astana Finance defaulted in April and May after credit markets froze and the nation’s property bubble burst.

“The regulator has agreed not to withdraw the banking license on condition that Temirbank takes urgent steps to secure its satisfactory recapitalization and other steps by the end of December,” Temirbank said in the statement. Temirbank is Kazakhstan’s 10th biggest bank.

The Financial Supervision Agency and the Specialized Financial Court of Almaty have approved plans to restructure Temirbank’s debt. The restructuring will involve international bond guarantees and domestic bonds, certain trade finance- related transactions and certain related-party obligations, the Almaty-based lender said in the statement.

Claims Suspended

Approval of the plan suspended any claims against Temirbank and prohibits foreclosure on the bank’s property, according to the statement.

Temirbank had a 10-month net loss of 110.8 billion tenge ($745 million), compared with a loss of 389 million tenge in the same period last year, according to figures compiled under Kazakh accounting standards and posted on the Financial Supervision Agency’s Web site. The bank’s assets dropped to 205 billion tenge as of Nov. 1 from 301 billion tenge.

The bank’s liabilities exceeded its assets by 61.2 billion tenge as of Nov. 1, the regulator said. Temirbank has $512 million of debt due by 2021, according to data compiled by Bloomberg.

Kazakhstan, Central Asia’s biggest energy producer, has invested $19 billion to prop up its banking system and economy since the end of 2007. Samruk-Kazyna acquired a 75.1 percent stake in BTA in February.

BTA Bank owns 55.6 percent of Temirbank, according to the Kazakhstan Stock Exchange. BTA creditors face losses of as much as 82.25 percent under a proposal to restructure $10.3 billion of debt. The Almaty-based bank aims to reach a preliminary agreement with a creditors committee by Dec. 7.