BTA Bank Sees 2011 Profit After Reaching Debt Accord

Dec. 22. Bloomberg

By Nariman Gizitdinov

BTA Bank Sees 2011 Profit After Reaching Debt AccordBTA Bank, the biggest of four Kazakh lenders to default this year, expects to return to profit in 2011 after its net loss widened to a record while it sought to restructure debt.

The bank expects an “insignificant loss” next year, while reducing loan provisions by 10 percent, Chief Executive Officer Anvar Saidenov told reporters today in Almaty.

The bank’s net loss of 2.06 trillion tenge ($13.9 billion) in the first 11 months of the year, as its provisions rose to 1.98 trillion tenge, the Financial Supervision Agency has said. BTA’s assets under Kazakh financial standards declined by almost a third to 2.08 trillion tenge on Dec. 1 from the same date last year, the regulator said.

BTA plans to cut its $11.6 billion of principle debt to $4.56 billion after paying $1 billion in cash and giving recovery notes and a 15 percent equity stake to creditors, the lender said today. Kazakhstan ordered BTA to get creditors’ approval to restructure the debt before March 23, the financial regulator said this month.

The state-run lender’s loss would narrow to 1.1 trillion tenge after the restructuring, Saidenov said.

The bank’s loan portfolio will shrink 0.3 percent next year, Saidenov said. Loans increased to 2.55 trillion tenge in the first 11 months from 2.34 trillion tenge a year earlier, according to the financial regulator.

BTA Bank plans to recover 20 percent of provisions, said Chairman Arman Dunayev, who is also deputy head of the National Wellbeing Fund Samruk-Kazyna, which manages the state’s 75.1 percent stake in the bank.

The National Wellbeing Fund took control of BTA in February and the bank defaulted in April after credit markets froze and Kazakhstan’s property bubble burst. Alliance Bank, AO Astana Finance and BTA’s Temirbank unit have also defaulted, leaving Kazakh lenders seeking to reorganize $20 billion of debt.

BTA Bank plans to recover in full a 54 billion-tenge loan it gave to Temirbank after restructuring the unit’s debt, Dunayev said today.