Kazakhstan's banking sector is the envy of the former Soviet Union. It is the most transparent, the most sophisticated, the best regulated, and the fastest growing. Total assets of the sector have grown by an average of 40% over each of the last four years.
BTA has been taking advantage of that fast growth. Its own assets have grown from $1.4 billion in 2002 to $4.8 billion in 2004. Net income has also grown, from $30 million in 2003 to $53.7 million in 2004.
The bank has been supported in its growth through its intelligent borrowing strategy on the international debt markets. It has borrowed $1.5 billion via 10 debt deals over the last four years, with steadily declining interest rates and improved credit ratings.
The bank is also about to close a benchmark syndicated loan. Arab Bank plc, The Bank of Tokyo-Mitsubishi Ltd, HVB Group (Bank Austria Creditanstalt AG / Bayerische Hypo-und Vereinsbank AG) J.P. Morgan plc and SANPAOLO IMI S.p.A. have been mandated by BTA to arrange a one-year syndicated loan, launched at $300 million. Arab Bank plc, The Bank of Tokyo-Mitsubishi, Ltd. and J.P. Morgan plc are acting as Joint Bookrunners, Bayerische Hypo-und Vereinsbank AG is Facility Agent and SANPAOLO IMI S.p.A acts as Documentation Agent to the loan accordingly. Closing is set for mid-September, to coincide with BTA's celebrations of its 80th birthday.
The proceeds of the loan will be used to provide financing to import-export oriented customers of the Bank. Earlier in July, BTA raised a bridge syndicated facility, arranged by the same banks, for $250 million to refinance existing indebtedness. It is worth mentioning that TuranAlem, also known as the Kazakh "benchmark setter", has again proven its status by having the lowest margin set at the time, paving the way for other local banks to negotiate their pricing further.
Our earlier 2005 benchmarks include raising financing under a Murabaha Islamic loan, a Schuldschein transaction and an oversubscribed 3-year working capital syndicated facility.
The bank is the top Kazakh bank by assets, and the second biggest bank by loans and deposits. It is also a leader in profitable new markets, such as mortgages. The bank has developed a wide spectrum of financial products to offer Kazakh consumers – such as leasing, investment banking, insurance products and pension funds.
However, BTA chairman Saduakas Mameshtegi says it is not enough for the bank to rest on its laurels in the Kazakh market. He says: "If we continue to grow at the rate we are growing domestically, sooner or later we could have issues with the anti-monopoly commission. So we must look to maintain our leading Kazakh position, while finding growth abroad."
Last year, the bank began a bold series of moves into neighbouring markets. It acquired four small banks in different provinces of Russia – Slavinvestbank, Omsk Bank, JS Commercial Bank BTA-Kazan (Kazan'), Agroinkombank (Astrakhan'), in Belarus – Astanaeximbank, in Georgia –SilkRoad Bank and in Armenia – International Investment Bank. It is in talks to buy a Ukrainian bank. It has also set up 10 representative offices throughout Russia, CIA and China: Moscow and Yekaterinburg (Russia), Kyiv (the Ukraine), Minsk (Belarus), Baku (Azerbaijan), Dushanbe (Tajikistan), Yerevan (Armenia), Shanghai (China), Tbilisi (Georgia) and Bishkek (Kyrgyz Republic). The bank is looking to do so in Uzbekistan as well.
For institutional foreign investors, BTA offers many opportunities to gain exposure to its strong growth story. It aims to issue up to $3 billion in debt over the next five years. It is actively diversifying its investor base, and has recently been successful in attracting Asian retail and institutional investors to its debt products.
The bank may also float a portion of its equity on a foreign stock exchange, as several Kazakh companies intend to do in the next 18 months. However, BTA will probably only do this once it has secured a foreign strategic partner.
Thus Bank TuranAlem is in a very exciting and dynamic stage of it and Kazakhstan's development. It is following a pan-CIS banking model, according to the principle: "One Bank. One Account. CIS"