Kazakh National Bank comments on solutions to get back Pension Fund, IBA money

    A representative of the National Bank has commented on the alternate solutions proposed to return the Unified Pension Fund's assets, Kazinform reports.
    "The most unappealing option is the third one with bonds of the International Bank of Azerbaijan exchanged at par for a 7-year 3.5 percent issue. The other two options, swapping the USD250MM debt into USD200MM Azerbaijani sovereign bonds with a 12-year maturity at 5.125 percent rate or a one-on-one swapping into 15-year 3.5 percent sovereign bonds are also lossmaking. Nonetheless, we have made no decision so far as we are thoroughly calculating the risks", Director of the National Bank Monetary Operations Aliya Moldabekova said.
    The National Bank does not give names of the people who had decided on the risk investment in the IBA in 2014.
    "Members of the Investment Council are the chiefs of the National Bank subdivisions. At that moment, the investment met the criteria of that time. As we know, the decision to invest USD250MM in the IBA was supported by the members as the Azerbaijani Finance Ministry owned 50 percent of the bank. However, at that moment nobody paid attention to the fact that it was a private placement. Thus, we have become the only holders of these bonds. They were structured via the offshore company. No need to be scared, it's a commercial practice. The problem is that our participating interest is too big. Nowadays, similar things are no possible as the current investment limit does not allow one entity to hold more than 25 percent of bonds", Aliya Moldabekova says.
    Chairman of the National Bank Daniyar Akishev explained the situation with the investment of the UNPF reserves in Azerbaijani bank, Kazinform reports.
    "The problems of the Azerbaijani bank began in 2015. The National Bank requested the Azerbaijani side to return the invested funds, but neither the government of the country nor the bank agreed to pay the sum in advance. The details of the deal are debatable. We are going to submit the case to the law-enforcement structures," said Akishev.
    In his words, USD250mln were invested in October 2014 in the Azerbaijani bank in total.
    "This decision was made by those who worked at the National Bank at that time," he added.
    Kazakhstan’s state-managed pension fund invested $250 million in Azerbaijan’s now troubled state-run bank IBA, and Kazakhstan’s central bank will seek legal evaluation of this investment decision, central bank head Daniyar Akishev said on Wednesday.
    The International Bank of Azerbaijan, the country’s biggest lender, suspended payments on some liabilities and said last week it was seeking support to restructure more than $3 billion of debt.
    The decision to buy through an offshore company $250 million of IBA’s 10-year bonds with a coupon paying 8.25 percent annually was taken in October 2014 by central bank officials at the time, Akishev said.
    That investment decision “is raising questions”, Akishev said, adding that Kazakh President Nursultan Nazarbayev had been informed about the situation and “relevant” law-enforcement bodies were dealing with the matter.
    Reported by Kazinform, Reuters.