Kazakhstan set to buy 25% stake in top four banks for US$5bn

Published: November 10, 2008

In late October, the government of Kazakhstan offered to buy 25% stakes in the top four banks in the country, for a total of over US$5bn, through its investment vehicle, Kazina. The deal still needs to be approved by the banks’ shareholders.

Kazkommertsbank, Halyk Bank and Alliance Bank are each set to receive US$1.3bn from the government, while BTA is set to receive US$2.3bn for a 25% stake. The part-nationalisation is being managed by JP Morgan and Credit Suisse, with Citigroup managing a bad debts fund for the government, which will buy toxic debt from troubled banks.

BTA’s CEO, Roman Solodchenko, told a conference call on November 4: “Why will BTA receive such a disproportionate amount of the total funds? Firstly, we remain one of the most capitalised banks in the system, so to buy out a stake in us costs more. Secondly, we’re one of the few growing banks in the economy, so we’re needed to support economic growth. And thirdly, we have US$2bn in external debt redemptions in 2009, which is the most of any of the four banks.”

Solodchenko said that, if the bank does not receive the funds from the government, it would have to pay its debt redemptions by shrinking growth. As it is, the bank hopes to meet its target of 20% asset growth by the end of the year.

Kazakhstan’s prime minister, Karim Massimov, told a cabinet meeting in early November that the government planned to move quickly this month to ease the economy’s credit problems.

He said: “I think over the next two weeks [before November 25] we will be able to defuse clots related to the lack of credit in the economy, settle problem loans through the distressed asset fund, boost banks' capital and pour additional liquidity into the economy.”