Kazakhstan needs bad banks to reduce the world’s worst delinquency rate in its financial industry, central bank Governor Kairat Kelimbetov said.
Kelimbetov, who took over at the helm of the Astana-based regulator in October, said in an interview in London yesterday that his main mission is to help transform the banking industry’s “architecture,” which proved vulnerable in the global financial crisis. His goal to cut the non-performing loan ratio by two thirds to 10 percent is realistic by January 2016, he said.
To complement an existing distressed-asset fund, “we have to establish bad banks to pass the bad debt to special collector agencies,” he said. “Banks should be responsible for their core business of providing loans and they also have to clean up their balance sheets. Otherwise, there will be zombie behavior by the banks, not providing loans to the economy and not writing off these bad loans.”
A collapse of property prices four years ago in the central Asian country saddled banks with billions of dollars in delinquent loans, triggering defaults and forcing the government to take over Alliance Bank, Temirbank and BTA Bank. Kazakhstan had the world’s highest share of non-performing loans in 2012 at 31.7 percent, leading the rankings for a second year, World Bank data show.
The government should provide tax breaks to banks and the debt-ridden companies to provide incentives to shareholders and management to resolve delinquencies, Kelimbetov said.
Samruk-Kazyna, the country’s sovereign wealth fund, is seeking to sell stakes in Kazakh banks. It owns a 79.9% stake in Temirbank, 67 percent in Alliance Bank and 97.3 percent of BTA Bank. The fund is considering a sale of its entire holding in Temirbank and 16 percent of Alliance Bank, to Kazakh billionaire Bulat Utemuratov, Interfax reported Nov. 20.
Several potential buyers are examining BTA’s finances, and while the sale probably won’t be completed this year, the most likely bidders may become known before year-end, said Kelimbetov, the former chief executive of Samruk-Kazyna.
A decision about any debt restructuring at Alliance Bank will be made during talks between Samruk-Kazyna and the lenders’ new shareholders, Kelimbetov said. Samruk-Kazyna is planning a meeting with Alliance’s creditors early next year, he said.
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