Kazakh FinMin reveals bank sell-off plan
Halyk Bank will hand over its profitable pension fund to be absorbed into the state system in exchange for the purchase of state-owned BTA Bank
Kazakhstan will complete the sale of the state-owned BTA Bank to rival Halyk by the end of this year, finance minister Bolat Zhamishev told Emerging Markets on the sidelines of the EBRD conference.
The deal will also see the government absorb Halyks profitable pension fund into a single, unified national pension fund controlled by the countrys sovereign wealth fund, Samruk-Kazyna.
Both deals have been discussed before privately, but the governments position on both has never before been made public. BTA will definitely be sold to Halyk this year, Zhamishev said.
Both deals are also controversial in their own ways. BTA, a lender that once bestrode Kazakhstans banking landscape, was nationalized following the financial crisis as debts piled up.
It has been slowly mended over the past four years, but its sale some would say forced sale to Halyk, the countrys most profitable and best-run bank, is a far-from-ideal solution, according to critics.
Doubts remain over BTAs asset quality, raising concerns that soured debts that remain on its balance sheet may weigh on Halyks long-term prospects.
The possible deal was first revealed on 27 March, when Halyks chairwoman told her board that Samruk-Kazyna, BTAs current owner, had offered to swap shares in the troubled lender for ownership of Halyks pension fund.
Halyk draws considerable profit from its pension fund, one of the countrys largest. Yet politicians and regulators in the countrys capital, Astana, and the financial hub, Almaty, have long-standing plans to create a single, public pension fund providing for the future needs of the countrys 17 million people.
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Kazakhstan is also pushing ahead with plans to match international institutional and portfolio capital with government funding to create a thriving new public-private partnership (PPP) asset class.
Shagala Rakhimzhanova, a regional director of national import-export agency Kaznex Invest, told Emerging Markets that around 20 PPP projects were currently in the pipeline, including new blacktop highways in leading first-tier cities.
The country is gearing up to host the World Expo in Astana in 2017, and president Nursultan Nazarbayev has pledged to build a world-class infrastructure linking Kazakhstans scattered cities, while greening the economy and improving services from wastewater treatment to public transport.
Many will be built via PPP projects with billions of dollars of investment that will be sucked into the sector in the years to come, according to Janet Heckman, the EBRDs Kazakhstan country chief.
Meanwhile Zhamishev announced that Kazakhstan would issue $1 billion in Eurobonds in the second half of the year in order to support the countrys rapidly growing corporate sector.
He said the bonds would be issued in US dollars, though he declined to name the banks likely to be mandated to underwrite the landmark deal. Central Asias largest economy last issued Eurobonds in 2000, paying off the final $350 million tranche in 2007.
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