BTA Bank proposes Second Debt Restructuring

    Kazakhstan's third-largest bank by assets, will propose the further restructuring of part of its debt at a shareholders' meeting on Jan. 26, the bank said on Thursday.
    BTA, majority owned by the state since a debt restructuring last year, had been expected to put forward two further rescue proposals by the end of the year, the central bank said this month.
    "Restructuring is an urgently needed measure which, if timely ... should ensure further normal functioning of the bank, strengthen its financial position and potentially restore its position in the market," BTA said in a statement.
    BTA was the largest of Kazakhstan's banks to default in 2009 when the global financial crisis hit Central Asia's largest economy, laying bare the banking sector's exposure to bloated real estate markets and excessive reliance on external funding.
    The bank managed to cut net debt by about two thirds to $4.2 billion through the restructuring program agreed with creditors last year, which installed sovereign wealth fund Samruk-Kazyna as its 81.5-percent shareholder.
    But persistent bad loans, slow growth in the non-commodity sectors of the economy and the cost of servicing a government funding package have strained the bank's resources to the point where it must rely on the wealth fund's support to stay afloat.
    Samruk-Kazyna's deputy chief executive Aidan Karibjanov said the fund had analyzed the financial situation at BTA and decided to support the bank's proposal to initiate restructuring of some of its debt.
    In a statement published on Samruk-Kazyna's website, www.sk.kz, Karibjanov said the debt restructuring would exclude depositors and trade finance creditors.
    "Samruk-Kazyna hopes that a second restructuring of certain of the bank's financial indebtedness ... will bring about the required level of capitalization of the bank," he said.
    BTA said that the agenda for the Jan. 26 meeting would include "issues relating to the necessity to restructure certain parts of the bank's financial indebtedness in order to reach an agreement with its creditors".
    It said the proposed restructuring would relate to the bank's liabilities to its creditors under outstanding obligations entered into during the restructuring that was completed in 2010.
    "In calling the meeting, the bank took into consideration the interests of its creditors, shareholders and holders of its GDRs (Global Depositary Receipts)," BTA said in the statement, according to Reuters.