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Kazkommertsbank and BTA Bank complete simultaneous transfer of assets

15.06.2015 17:59:23

15 June 2015, Almaty, Kazakhstan - JSC Kazkommertsbank ("KKB" or "the Bank") (LSE: KKB; KASE: KKGB), one of the largest banks in Kazakhstan and Central Asia, and JSC BTA Bank ("BTA") today announce they have signed an Agreement on the simultaneous transfer of assets and liabilities ("the Agreement") between the two banks. Under the Agreement, a part of BTA's assets and liabilities was transferred to KKB, and a portion of KKB's distressed assets was transferred to BTA.

The Agreement was signed in accordance with the resolutions of the joint Extraordinary General Meeting ("EGM")[1], the legislation on the integration process, as well as the shareholders' resolutions regarding the integration of KKB and BTA (See ‘Summary of the Integration Process').

The following assets and liabilities of BTA were transferred to KKB:

1.       All current and savings account balances of the legal entities and private individuals - existing account details remained the same;

2.       Balances on active card accounts, together with the corresponding payment cards - existing account details remained the same;

3.       Claims on loans to SMEs, corporate and retail clients. Notifications shall be sent to the borrowers' addresses as per credit reports;

4.       BTA's existing branches and offices;

5.       Part of BTA's fixed assets, inventories, securities and cash;

6.       Shares in BTA subsidiaries: JSC BTA Insurance, JSC BTA Zhizn, JSC SK Leasing, JSC BTA Securities, JSC BTA Ipoteka, JSC London-Almaty, Alem Card Ltd and Titan Inkassatsiya Ltd.

The preliminary book value of the BTA assets transferred to KKB amounted to KZT 413,337,489,004, while the book value of the BTA liabilities amounted to KZT 383,148,900,356.

In turn, the following assets of KKB were transferred to BTA:

1.       Claims on loans to corporate clients;

2.       Equity interest in Kazkom Realty Ltd, the Bank's subsidiary that manages real estate-related distressed assets.

The preliminary book value of the KKB assets transferred to BTA amounted to KZT 1,171,671,682,766.

KKB and BTA shall undertake a reconciliation of the transferred assets and sign reconciled acts of delivery and acceptance. The acts are to be submitted for an independent valuation to determine the fair market value of the assets. The balance of counter claims adjusted for the fair market value of the transferred assets is to be submitted to the Boards of Directors of KKB and BTA for approval.

KKB shall fulfill the legal responsibilities/obligations received from BTA in accordance with the legislation of the Republic of Kazakhstan and the terms and conditions set out in existing contracts between BTA and its clients.

The process of rebranding BTA's branches is due to be completed by the end of June 2015. Almost full range of banking products is already available to BTA and KKB clients in branches, which have been rebranded from BTA's design to KKB's.

BTA intends to voluntarily surrender its banking licence to the National Bank in the coming days; it will thereafter focus on managing the distressed assets both owned and received from KKB. Any proceeds received by BTA from its work with the distressed assets is to be used to repay its debt to KKB.

Summary of the Integration Proce

  • On 26 December 2014, the EGM of KKB and BTA shareholders approved the integration model of KKB and BTA[2] by transferring assets and liabilities between the two banks. The implementation of the model required: a change in Kazakh legislation; the transfer of BTA's external liabilities to KKB or repayment to another party; the independent valuation of the transferred assets of KKB and BTA; the approvals of the Boards of Directors of KKB and BTA; the official approval of the National Bank. In addition, the shareholders approved BTA's voluntary surrender of its banking licence and the further de-consolidation of KKB and BTA (See KKB press release dated 26 December 2014 for more information).
  • On 27 April 2015, the Law on Introduction of Changes and Amendments to Certain Legislative Acts of The Republic of Kazakhstan on Insurance and Islamic Financing ("the Law") was approved, enabling the integration process to proceed.
  • On 8 May 2015, a number of by-laws/non-legislative acts, outlining the terms and conditions of the integration, were approved by the Management Board of the National Bank. On 25 May 2015, the by-laws were registered by the Ministry of Justice.
  •  In November 2014, BTA's USD750  million Eurobond with a maturity date of 2022 and a coupon rate of 5.5% was transferred to KKB. BTA's remaining debt under trade finance facilities was repaid by BTA in December 2014. 
  • The market value of the transferred assets was preliminarily estimated by the independent valuators PriceWaterhouseCoopers Tax and Advisory Ltd and Colliers International Ltd on 31 August 2014 and 1 March 2015. The final valuation is to take place on 15 June 2015 (the actual date of the transfer).
  • On 26 May 2015, the Boards of Directors of KKB and BTA approved the transactions to simultaneously transfer assets and liabilities between KKB and BTA with a possible further reconciliation based on the independent valuation as of the actual date of the transfer.
  • On 27 May 2015, the Management Board of the National Bank approved the transaction to simultaneously transfer assets and liabilities between the parent bank (KKB) and its subsidiary (BTA).
  •  On 2 June 2015, KKB and BTA published announcements on the transfer of the BTA assets and liabilities in the newspapers ‘Kazakhstanskaya Pravda' and ‘Zan', as well as on the Banks' corporate websites in accordance with article 61-2 of the Law on Banks.

Contact details:

Aliya Nursipatova, Investor Relations
Alma Buirakulova, Investor Relations
Tel.: +7 (727) 258-51-25
E-mail: investor_relations@kkb.kz
Larissa Kokovinets, Director, Public Relations
Tel.: +7 (727) 258-54-56
E-mail: pr@kkb.kz

Instinctif Partners
 Leonid Fink, Partner
Tel: +44 (0)20 7457 2015;
M +44 783767 4444
E-mail: Leonid.Fink@instinctif.com
Tony Friend, Managing Partner
Tel; +44 (0)20 7457 2001;
M +44 (0)77 9886 4995
E-mail: Tony.Friend@instinctif.com

[1] The EGM of KKB and BTA Bank was held on 26 December 2014

[2] 99.54% of KKB's shareholders and 99.82% of BTA's shareholders present at the EGM approved the integration model