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Kazakh Bank Halyk to Sell Pension Fund for Cash, not Shares

Published: June 19, 2013 | 3:12 pm
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Kazakhstan’s Halyk Bank, the central Asian nation’s largest lender, said on Tuesday it expected to sell its pension fund by the end of 2013, making clear it preferred cash to the government’s offer of shares in state-run Bank BTA.

J.P. Morgan Chase has valued Halyk’s private pension fund, Kazakhstan’s largest pension fund by assets, at between $576 million and $715 million, Halyk Board Chairman Alexander Pavlov told reporters.

He said the bank was now expecting the government to give its own estimate of the fund’s value.

Kazakh President Nursultan Nazarbayev ordered the government in January to nationalise the country’s pension system by merging the assets of private pension funds into a single state-owned fund to support fast economic growth.

Deputy Prime Minister Kairat Kelimbetov told Reuters in March that the government planned to nationalise the country’s three largest pension funds this year by paying for them in state-owned shares in local banks.

A government order instructed sovereign wealth fund Samruk-Kazyna to offer Halyk Bank a swap of its private pension fund for shares in BTA, the country’s third-largest bank by assets, which was bailed out during the financial crisis.

Voicing Halyk Bank’s position after months of deliberations, Pavlov said the deals on the sale of Halyk’s pension fund and the purchase of BTA “ought to be parallel”. “These ought to be separate, exclusively cash deals,” he said.

Pavlov said BTA’s due diligence was only beginning, and Halyk Bank would decide – depending on the valuation of BTA – on whether it should enter BTA or not.

“It will all depend on the final price (for BTA),” he said. “BTA is quite a complex mechanism. We do not have a task to undermine Halyk Bank by buying BTA.”

BTA won creditor approval for its second debt restructuring in as many years at the end of 2012, aimed at cutting its debt of $11 billion by around 70 percent through a mix of write-offs and a debt-for-equity refinancing by Samruk-Kazyna.

At the start of this year, bad loans accounted for 78.2 percent of BTA’s total loan portfolio.

Halyk’s pension fund held assets worth 1.112 trillion tenge ($7.4 billion) as of May 1, 2013 and alone accounted for a third of all pension fund assets in Kazakhstan.

Source: Reuters

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