UniCredit Said in Talks to Sell Stake in Kazakh Bank ATF

UniCredit SpA, Italy’s biggest bank, is in talks to sell a stake in ATF Bank to a Kazakh investor, said a person with knowledge of the matter.

An agreement may be reached within weeks, said the person, who requested anonymity because the talks are private.

UniCredit Chief Executive Officer Federico Ghizzoni is selling assets as part of his five-year plan to cut costs and boost profitability. Ghizzoni told Bloomberg News in a March 2011 interview that the company would consider selling Almaty-based ATF Bank. A UniCredit official declined to comment.

“ATF Bank was purchased just before the financial crisis broke at a very high price compared with today’s evaluation,” said Alessandro Frigerio, a fund manager at RMJ Sgr in Milan. “I expect it would be very hard to sell at an interesting value in this environment.”

UniCredit owns 99.7 percent of ATF Bank through its Bank Austria AG subsidiary. The Kazakh bank, the fifth-largest lender in the country, was purchased by UniCredit for $2.1 billion in 2007 and the company has since taken writedowns on the unit as the nation’s banking industry suffered a surge in bad loans.

UniCredit fell 2.1 percent to 3.39 euros by 4 p.m. in Milan trading, valuing the firm at 19.7 billion euros. UniCredit’s shares have fallen 20 percent this year, compared with a 14 percent increase in the 38-member Bloomberg Banks and Financial Services Index.

Bad Loans

Kazakhstan’s banks are “handcuffed” by non-performing loans and need to repair their balance sheets faster to free up resources required to generate profit from lending, the International Monetary Fund said on Nov. 12. The nation’s lenders are still weighed down by souring assets three years after central Asia’s biggest energy producer used $10 billion from its oil fund to support banks and companies following a credit squeeze and collapse in property prices.

ATF Bank boosted its equity capital by 15 billion tenge ($100 million) in September, an increase of 9.8 percent from the level of July 1. UniCredit has continued to inject money into the unit’s equity capital, including a 40.1 billion-tenge share sale in April 2011.

UniCredit signed a guarantee agreement with ATF in December 2009, which underwrites corporate loans of $2.8 billion, the Kazakh lender said on its website in August. Under this guarantee that could run until April 2029, loan losses of more than $728 million are guaranteed by the Milan-based bank.

Kazakhstan’s central bank said Sept. 17 it may restrict foreign banks from providing guarantees used by their units in the country to underwrite loans because that gives an advantage over local lenders. The central bank “reckons” foreign banks should inject capital instead of providing guarantees, Deputy Chairman Daniyar Akishev said at the time.

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