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BTA Weighs Foreign Sales Abroad as New CEO Shifts Focus

BTA Bank Chief Executive Officer Magzhan Auezov
BTA Bank Chief Executive Officer Magzhan Auezov said, “Executing the task of building a strong bank -- without losing customers and achieving it as efficiently as possible from the point of view of expenses -- that’s our key performance indicator.” Photographer: Vadim Solovyov/Kazkommertsbank via Bloomberg

BTA Bank, the twice-defaulted Kazakh lender acquired by Kazkommertsbank and businessman Kenges Rakishev, will pivot toward its home market as it weighs a sale of foreign assets, Chief Executive Officer Magzhan Auezov said.

“Our focus is on the domestic market,” Auezov said in an interview in Almaty, the country’s commercial capital where the bank is based. “From the point of view of managing foreign assets, we’re prepared to consider their sale,” including bank holdings in Belarus, Ukraine, Georgia and Armenia.

BTA is retrenching from foreign markets after Kazkommertsbank, the country’s largest lender, agreed to pay $465 million to gain control and combine operations this year. Before its first debt default five years ago, BTA amassed the most assets abroad of any Kazakh bank by buying stakes in lenders from Russia to Turkey. The country’s biggest bank at the time, it defaulted on $12 billion of debt in 2009 and completed a second restructuring in 2012.

The attention is on “clients of BTA in Kazakhstan, its network of branches,” Auezov said. “That’s where we believe there’s synergy and where we can create value added as a result of this whole project.”

BTA’s units in Kazakhstan will be left with a stark choice between being merged or sold. In Kazakhstan, BTA owns three insurers, a mortgage company and a brokerage, according to its website.

“If an asset has no use, then companies will be closed,” Auezov said.

Georgetown, Columbia

A 38-year-old graduate of Georgetown University in Washington and Columbia University in New York, Auezov is taking a hands-on approach in steering what he describes as an “unprecedented deal” for Kazkommertsbank. Wearing jeans and a gray-and-white polo shirt, he conducts the interview shortly after inspecting construction sites operated by borrowers of BTA and its new owner.

Auezov became CEO in February and remains a member of the management board at Almaty-based Kazkommertsbank. Together with Kazkommertsbank CEO Nina Zhussupova, he visited BTA’s biggest branches in April and May, meeting their key clients.

Kazkommertsbank is seeking to bring to BTA improvements in areas including greater operational efficiency, technological expertise and stricter cost control, he said. The combined entity’s cost-to-income ratio should be at Kazkommertsbank’s current level, according to Auezov.

‘Strong Bank’

“Executing the task of building a strong bank -- without losing customers and achieving it as efficiently as possible from the point of view of expenses -- that’s our key performance indicator,” he said.

Bringing the share of non-performing loans near a target set by the regular will be “difficult,” he said. The lender will write down delinquent debt and increase efforts to collect bad loans while issuing new credit, according to Auezov.

“We’ll do everything we can,” he said.

The Kazakh central bank said it will withdraw licenses from lenders whose bad loans exceed 10 percent of the total starting in 2016. Loans overdue by more than 90 days at BTA reached 2.4 trillion tenge ($13 billion) as of June 1, or 89.5 percent of the total. At Kazkommertsbank, they amounted to 1 trillion tenge, or 35 percent, central bank data show.

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