In one of the biggest syndicated loans to a Kazakh bank to date, the EBRD and a syndicate of commercial banks are providing Kazkommertsbank (KKB) with a US$300mn EBRD A/B loan facility.
The term of the loan is seven years for the A loan and five years for the B loan which is the longest tenor ever achieved for a Kazakh bank.
The A loan of US$100mn will be for the EBRD’s own account, while the B loan of US$200mn has been fully underwritten and syndicated by Calyon and Sumitomo Mitsui Banking Corporation Europe.
The loan will be used for on-lending to retail customers for residential mortgages and privately-owned mid-sized corporate customers outside the construction, oil and gas sectors. Being the longest term for a syndicated loan provided to a Kazakh bank, the transaction will set a new maturity benchmark in the market and allow Kazkommertsbank to further diversify and secure its funding sources.
The strong growth of the Kazakh economy (10.6% in 2006) is also reflected in a rapid development of the country’s financial institutions. Kazkommertsbank is Kazakhstan’s biggest bank and has been working with the EBRD since 1996. The bank is now increasingly focusing on smaller corporate clients where considerable growth can be expected over the next years.
Kurt Geiger, EBRD business group director, financial institutions, says the loan will facilitate KKB’s efforts to finance a wide range of customers. It will also contribute to the diversification of the country’s economy by specifically targeting the funds for on-lending to privately owned mid-sized companies.
Andrey Timchenko, managing director of KKB, adds that the transaction is a significant breakthrough in the Kazakh market considering the terms and maturity of the financing.
The loan demonstrates the strong interest of international commercial banks in the Kazakh market and their readiness to take longer exposure to KKB. This will support Kazkommertsbank’s long-term business strategy to strengthen its position in the SME and retail segments.
To date, the EBRD has invested more than €1.5bon in Kazakhstan. In the financial sector alone, the EBRD currently has investments with 10 banks in Kazakhstan and four non-banking institutions.