Former CEO of BTA Bank Roman Solodchenko has condemned proposals for the restructuring of Kazakhstan’s BTA Bank.
He has stated: “The proposed versions of the restructuring process are cause for serious concern. They confirm the reluctance of the Kazakhstan government to support the bank.”
He goes on to suggest that the sovereign wealth fund, Samruk-Kazyna, which took over the bank at the beginning of the year, is trying to bankrupt BTA through its creditors.
He adds that the restructuring plans are “significantly worse” than those offered to creditors of Alliance Bank.
Last week, BTA Bank revealed its debt restructuring proposals, and set a deadline of September 18 for approval from creditors. Approval of the plan is required before there is any re-capitalisation of the bank.
Creditors have been offered four options, of which one provides immediate redemption with a discount of 82.25%.
In his statement, currently being distributed by his pr agency, Solodchenko accuses the current management of failing to stem the draining of the bank’s finances: “Samruk‐Kazyna management team has ploughed US$7bn into the bank, a sum comparable to the capital of Sberbank Russia.
“Despite the unprecedented write‐off of half of the loan portfolio, the deterioration in credit facilities and the deposit drain continue. This process has now become irreversible.”
Solodchenko is also championing the trade finance market. BTA’s restructuring plans have included trade finance debt causing angst among many trade financiers who believe that trade finance should be given preferential treatment in debt rescheduling. Not only, they argue, has trade finance historically tended to be paid out in full earlier than other debts, trade finance is also of strategic importance to a developing economy, and therefore should be favoured. Such concerns were expressed in a recent open letter to the Kazakh president Nazarbayev from the Banking Association for Finance and Trade (Baft).
Solodchenko adds his voice to this argument, warning BTA’s management not to ignore the complaints from the trade finance world. “Because of this short-sighted approach, the financing of exports and imports in Kazakhstan may become the exclusive prerogative of foreign banks.
“I hope that the government will take measures to exclude trade financing from the restructuring process and ensure that Kazakhstan complies with existing international practice.”
In January this year, the Kazakh government took over the bank, after ordering the issuance of new shares in BTA, gaining control over 75.1% of the bank’s shares. The chairman of the board of directors Mukhtar Ablyazov was dismissed, and shortly after this Roman Solodchenko, CEO, and Zhaksylyk Zharimbetov, first deputy chairman of the management board, both resigned.
The proposed BTA Bank debt restructuring options:
• A cash buy back option for a maximum cash amount of US$1bn with a 82.25% discount.
• A medium-term roll over option with a 60% discount.
• A subordinated long-term par roll over option accounting for tier 2 capital.
• A debt to equity swap option with a 80% discount.
In addition, recovery notes will be issued to creditors to allow for their participation in BTA’s asset recovery strategy.
Reader Comments