>>Share price drop linked to purchase of BTA Bank
NEW YORK, Oct. 1 (The Conway Bulletin) — Shares in Kazkommertzbank have nose-dived since it bought a stake in BTA Bank from the Kazakh government earlier this year.
By the end of September, shares in KazKom, as the bank is commonly known, traded at $1.65 on the Kazakh Stock Exchange, down by 37.5% since July when it completed buying nearly half of BTA.
Analysts said the drop highlighted the toxic nature of BTA’s bad debt portfolio and a drop in profit. KazKom said profit for the first half of 2014 was down by 6% (Sept. 30).
A source from the banking industry said: “Most bad loans are with BTA which is unable to recover them from its debtors. This entails a huge cost.”
Mountains of bad debt still holds back Kazakhstan’s financial sector, a legacy of the Global Financial Crisis of 2008/9 when the government had to buy up a handful of banks. One of these was BTA Bank.
At the end of last year, the Kazakh government said it wanted to sell its shares in government-owned banks.
Kenes Rakishev, a young Kazakh businessman with strong links to the elite and KazKom, controlled by the London-based businessman Nurzhan Subkhanberdin agreed in February to buy the bank. At the time, sources with knowledge of the Kazakh finance centre said buying BTA Bank made no business sense for KazKom. Instead, they said, it was a political move by Mr Subkhanberdin to win favour.
ENDS
>>This article was published in issue 202 of the weekly Conway Bulletin newssheet which covers Central Asia and the South Caucasus. For more click here