Interview one of the participants of the St. Petersburg International Economic Forum - Kairat Kelimbetov, the head of Kazakhstan’s National Welfare Fund (Samruk-Kazyna)
Q. What is the global importance of the St. Petersburg Forum?
A. Whereas at Davos organizers try to bring different people and discuss the global agenda mostly in terms of the Western market, in St. Petersburg I think we could have some kind of regional agenda - what should happen in terms of stabilization programs, in terms of the crisis, anti-crisis measures, what we should do beyond the crisis in terms of this CIS market - and it is a very good opportunity. So this is a global economic forum, because of the participation, and the participants represent significant financial institutions and significant world-wide companies. But also there is also a regional agenda. And I think that for the Russian leadership, in terms of bringing people together to discuss future opportunities, cooperation and development, it is a good step to take some responsibility for the future. And we consider it not only as a meeting between CIS participants, but also a discussion of questions on CIS markets and global companies.
Q. You mentioned several times the word “crisis”. Kazakhstan’s anti-crisis measures are believed to be quite successful.
A. I think actually the consequences of the crisis in Kazakhstan were discovered maybe a year before other countries of the CIS. Because there is some linkage of the situation in the banking sector in Kazakhstan and the situation of global financial institutions’ trust in emerging markets. To put it simply, two years ago global financial institutions stopped to refinance debt to the Kazakh market. And in these terms the first challenge was the credit crunch issues in Kazakhstan. But later on we got the full consequences of the financial and economic crisis, I mean the oil prices were going down, along with prices for metals, and the situation was really uncertain. So in these terms, because the Kazakh government started work a year before, I think we were more ready than other countries to really response to this challenge. The government package of financial stimulus measures, and the government bail-out program used all this previous experience, and I think there is some unique response in terms of creating a special vehicle, a special financial operator like Samruk-Kazyna in order to really respond in a fast and efficient way.
Q. Does any anti-crisis program assume a restructuring of debts?
A. The government proposed a special recapitalization program in October last year, and the proposal was about the four largest banks in Kazakhstan, which you know very well, GazcommerceBank, Holyk bank, PTA and Alliance. And the idea of the government was that because of the level of imperial was increased to 15%, which is huge, the government proposed to the shareholders of those banks to recapitalize the banks, and if they could not recapitalize themselves the government proposed assistance from, let’s say, using the money of the national oil fund in Kazakhstan, but in the [sale] of the common shares of these banks. So, in two banks - Gazcommercebank and Holyk Bank - the government is now a significant shareholder. We gave each bank one billion US dollars in assistance, and we’ve got more than 20% of the shares.
So this means we support the capital of these banks on the one hand, and on the other we give them additional liquidity, which gives more sustainability for these two banks. In terms of BTA and Alliance, it was a more complicated situation. The shareholders of Alliance Bank proposed buying 75% of common shares for a hundred tenge, a symbolic price. The idea was to bring the government or Samruk-Kazyna and to manage in this very difficult situation, but we had two conditions. One condition was: recently the management discovered significant fraud in these banks, and lack of capital. So we proposed to implement a significant restructuring program on the one hand, and on the other we need some indemnity of the mistakes of the previous management and the previous shareholders.
Now the Alliance Bank’s management is working with creditors, and recently there was a meeting with investors which consist of sixty creditors, and they create a special student committee where the seven most famous global institutions considered this opportunity. When Alliance Bank’s negotiations with the creditors and the restructuring procedures are finished, we will reconsider our opportunities for the shareholders in this bank. But in order to put this bank in a sustainable local position, we provide them with additional liquidity through the deposit of the national companies.
And in terms of BTA, is the most complicated of issues. You know that BTA before the crisis was the largest bank in Kazakhstan in terms of asset size, and the situation became critical in February. In order to avoid potential bankruptcy of this bank, for BTA bank we could use the famous words: BTA is “too big to fail”, the government using the amendments to legislation in terms of financial stability. It was a decision of two co-worker banks, and the bank issued additional shares and the government bought 75% of the new shares and injected more than 1.7 billion US dollars in capital. Since that time the government appointed us, Samruk-Kazyna, to be a shareholder and we started do due diligence on the situation in terms of the restructuring of external debt and make the BTA management pay debt according to the schedule. Using different triggered opportunities, some financial institutions accelerate the payments of external debt, any entity in the world could not really pay everything overnight and in one day. It was the decision of the BTA management, the board of directors, to start negotiations in order to restructure the debt. I think that after restructuring the SK Samruk-Kazyna would like to propose some recapitalization program, and we also consider opportunities, bringing new strategic investors. We have negotiations with Russia’s Sberbank and I think it will be very useful for both sides to consider these opportunities.