Almaty. January 24. KazTAG – Rassul Rysmambetov. Despite the fact that financial support of sovereign wealth fund Samruk-Kazyna could not restore nationalized BTA bank, there are efficient ways to revive the bank and win creditors’ trust back, a group of experts believe.
The problem of the Kazakhstani financiers is that our republic entered the global world with its strict and established rules. Western nations created global financial regulations and system, and we are doomed to be catching up with them for some time from now.
Therefore, we think that it is more important to keep to the spirit of market economy rather than to the letter of modern standards that become more complicated every day.
One of the main rules of market economy is to pay your debts back. This means more than success, this means trust of your business partners to you.
A group of experts told KazTAG that it is reasonable to turn down ideas to restructure debt for the second time or merge BTA with another backbone bank in Kazakhstan. The consultants believe it is still possible to restore BTA through unprecedented crisis management measures of economic nature.
Currently, Samruk-Kazyna has no financial steroids – enormously large and ceaseless loans from abroad – nonchalantly raised by previous managers. Modern banking modus operandi would not work for restoration now. So it is time to develop an efficient business model for the BTA. A workable example can be Asian banks that overcame crisis of late XX century.
The experts think that with existing legislative restrictions in Kazakhstan, “it is possible though hard to reach a half of banking growth dynamics seen in 2000-2004”. Therefore it is wise to remember an old saying that if one cannot win by rules, he should change them.
Crisis period now calls for crisis solutions.
What BTA bank, or even several depressed Kazakhstani banks, need badly now is legislative approval for non-core activities. Some might say that this move would be a step back in banking legislation, however it will allow Kazakhstan to keep the spirit of market economy – always pay your debts back.
Moreover, debt restructuring, bank’s merger or conservation would more damage Kazakhstan’s investment image – much more than reputational failures from temporary amendments to legislation, the experts think.
The experts’ suggestions are based on surviving statistics for Korean banks through crisisin 1998. The Korean banks that survived that crisis were the ones integrated in industrial-trading conglomerates (chaebols). Those banks received enough cash flow from other parts of their holdings to live the crisis through.
That is why the consultantsare convinced the government has to give BTA permission for trading operations with grain, oil products, crude and other projects – through bank’s direct subsidiaries.
The named operations are the most profitable ones in Kazakhstan. This step would allow BTA to pay back all its debts – even already restructured $12.2 bl. The experts suppose it would take 3-4 years to return BTA to net profits and start paying the core debt.
Certainly, BTA creditors financed an emerging market and are prepared to lose their money. Anyway, any investor has a certain portion of trust to his partner. Because there is no sense in working at emerging markets without this portion of trust and hope to earn more. And it means that a good number of BTA creditors might understand and accept an open and sincere suggestion from the bank to return the debt through the ways other than financial ones – because business extends beyond finances, its extends to politics and future. Provided suggestion from Kazakhstan would be made with open books and heart.
However, a part of creditors might demand an immediate return of debt – without any restructuring and economic plans. We do not rule out that current pool of creditors might include representatives of bank’s former management interested in further destabilization of BTA. Nevertheless, that is what the negotiation consultants are for – to persuade creditors to mutually beneficial solutions.
After economic rehabilitation period, BTA would alienate non-core assets to Samruk-Kazyna, the experts suggested.
In 2009, Kazakhstan missed the moment to liquidate the bank – right after forced emigration of Mukhtar Ablyazov. And now, if Kazakhstani financial authorities would try some measures, which will be blocked by creditors, it will mean that the government has made a $6-bl blunder. And someone will have to be responsible for it, because creditors will be suing Samruk-Kazyna as the bank’s main shareholder now. And this fund has lots of assets to be sued off. E.g. the Rompetrol Group – with assets in Europe and Libya.
The experts mean not just saving BTA, but developing it back to an independent, BBB level. This will be the best and only option for Kazakhstan and Samruk-Kazyna. Logic of this option is simple – we must show the global market that our investment climate is still favorable and Kazakhstan keeps to its promises.