BTA Bank May Begin Paying Creditors Half of Recoveries in 2012

The former Soviet republic’s third-largest lender by assets won’t pay on recoveries this year or next unless it receives cash exceeding 134 billion tenge ($913.6 million) and 103 billion tenge, respectively, the Almaty-based lender said in a presentation on its website today.

Starting on Jan. 1, 2012, BTA will pay half of recoveries realized in cash to holders of recovery units, the bank said. Creditors holding $10 billion of debt have been offered recovery units that let share in recoveries on impaired assets.

BTA’s creditors are expected to vote on a restructuring plan on May 28, the bank said. The lender defaulted last April, two months after it was taken over by the state-owned National Wellbeing Fund Samruk-Kazyna. A creditors’ committee signed a detailed term sheet on April 18.

Besides BTA, which was the country’s biggest lender before its collapse, Alliance Bank, AO Astana Finance and Temirbank, then controlled by BTA, have also defaulted, leaving about $20 billion in debt to be restructured.

Banks in Kazakhstan will face continued weak asset quality, unreliable funding conditions, and low capitalization for at least two more years, Standard & Poor’s said on April 19.

Development Plan

Chief Executive Officer Anvar Saidenov said on April 21 that BTA would issue 10-year recovery notes to creditors for about $5 billion of bad loans as part of its debt restructuring.

BTA plans net income of 933.9 billion tenge this year after writing off 934.2 billion tenge of debt, the lender said today. The bank forecasts net income of 14 billion tenge next year and 61 billion tenge in 2014.

The lender plans to win back its major corporate clients and restore deposits to their 2008 level, BTA said. In 2008, BTA held 817 billion tenge of deposits, 51 percent of which came from corporations, according to the presentation.

Kazakh prosecutors issued arrest warrants for former BTA Chairman Mukhtar Ablyazov and one-time Chief Executive Officer Roman Solodchenko in March 2009 on suspicion that they embezzled money from the bank and laundered it through loans to fictitious companies. Ablyazov and Solodchenko, who now live outside Kazakhstan, have denied the charges.

Source: businessweek.com