Banks urge Kazakhstan to repay trade debt in full
Reuters, ABA, 07.08.2009
ALMATY, Aug 7 (Reuters) - Two international banking industry associations have urged Kazakhstan to exclude its banks' trade finance debt from restructuring, saying such a move would hurt the whole banking sector.
The groups, the Bankers' Association for Finance and Trade (BAFT) and the International Financial Services Association (IFSA), sent an open letter to Kazakh President Nursultan Nazarbayev late on Thursday.
The letter was also sent to the management of BTA , Kazakhstan's largest bank, which is trying to restructure its $13 billion debt.
"Our bank members are concerned about the possibility that trade finance will be subject to significant discounting in any proposed bank restructuring in the Kazakh banking sector," the groups said.
They said a common international practice was to exclude trade finance debt from restructuring.
"Discounting repayment of those obligations will have a significantly negative impact on the entire Kazakhstan banking sector and, consequently, the Kazakhstan economy," the groups said.
BTA, which has about $3.6 billion in trade finance debt, has yet to decide whether it will be restructured along with other liabilities. If trade debt is excluded, other creditors may face losses of up to 97 percent, BTA said last month. (Writing by Olzhas Auyezov; Editing by Tomasz Janowski)
2009-08-07 05:37:39 GMT (Reuters)
BAFT AND IFSA URGE ACTION TO RESTORE CONFIDENCE IN KAZAKHSTAN
WASHINGTON – Two international banking groups sent a letter today to Kazakhstan President Nursultan Nazarbayev urging further action to restore confidence in the country's banks and ensure the timely repayment of trade finance obligations by the Kazakh banking sector.
In the letter, the Bankers' Association for Finance and Trade (BAFT) and the International Financial Services Association (IFSA) expressed concern over recent proposals for debt restructuring in the Kazakh banking sector. The groups urged President Nazarbayev to take all measures necessary to ensure the full and timely payment of trade obligations in any bank restructuring.
"Altering the terms of trade finance repayments can significantly jeopardize a country's source of funding for critical economic advancement," the letter stated. "Any decision should follow prior international practice regarding the disposition of trade-related transactions. Discounting repayment of these obligations will have a significantly negative impact on the Kazakhstan banking sector and the Kazakhstan economy."
"A failure by a bank to pay its trade obligations in full will have a number of adverse consequences for the entire country, leading to business disruption and increased cost of trade, impacting inflation and growth potential, thereby exacerbating the current crisis," the groups said in the letter.
The Bankers' Association for Finance and Trade is a financial trade association whose membership represents a broad range of internationally active financial institutions and companies that provide important services throughout the global financial community. For over 85 years, BAFT has advanced the growth and evolution of international financial services. As a worldwide forum for analysis, discussion and advocacy in the international financial services community, BAFT plays a unique role in expanding markets, shaping regulatory and legislative policy, developing business solutions and preserving the safety and soundness of the global financial system. The association Web site is www.baft.org.
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