Frequently asked questions13.02.2009 / Press-service
With the government as a shareholder, BTA is poised to retain the trust of its depositors and creditors. Now as ever, shareholders and management are single-minded in their commitment to let BTA continue as Kazakhstan’s leading financial institution. Mr. Arman Dunayev, Chairman of the Board of Directors of JSC BTA Bank and Deputy Chairman of the Management Board of JSC The National Welfare Fund Samruk-Kazyna, took his time to answer some of our questions about BTA’s future direction.
- Q: What were the first steps taken by the new management?
- A: Let me remind that the government’s capital injection into BTA’s capital should total KZT 251 billion. As early as February 3, KZT 212 billion was already wired to BTA’s correspondent account.
As the first step, as soon as this money was in the bank, we made sure that all our ATMs were stuffed with cash, both tenge and US dollars. So, the next day, February 4, when the National Bank made its move with the devaluation, we didn’t have any problems with withdrawals.
The balance of KZT 39 billion will remain in the special account with the National Bank until the government and Samruk-Kazyna decide on BTA’s additional capitalization. I wouldn’t rule out this happening soon.
Another thing that we did was to make sure payment orders were executed properly, because by the end of January there was a US$150 million backlog of payments in the bank. Well, it’s no longer the case anymore. Specifically, on February 4, average claims per borrower were KZT 100 million, but, on February 6, it was down to KZT 37 million already. Of course, payroll, tax and pension claims were the first ones that we cleared, most of depositors have been satisfied, too.
As parent, BTA made some of its cash available to Temirbank to help it meet similar problems.
- Q: What are the immediate tasks ahead?
- A: We now have an arrangement with Samruk-Kazyna whereby BTA Bank will continue taking part in the government’s economic stabilization programmes, particularly, in the ones that are designed to support SMEs. Based on a preliminary analysis, we rate BTA’s SME portfolio as fairly sound and performing. This is exactly the portion of our loan book that will sustain us and, in the long run, let us use the proceeds to roll over the existing portfolio or issue new loans to this segment.
With respect to retail operations, BTA and Samruk-Kazyna have reached an agreement between themselves that is all but signed, whereby BTA’s current mortgage portfolio will be refinanced.
I think I need to point out that, traditionally, BTA’s retail portfolio was a significant one. In the meantime, devaluation has left a portion of it under a certain stress. Still, we continue working with consumer loans and those customers that made their payments in a timely fashion will possibly be offered restructuring and a lower interest margin. But, again, the most important thing for us is to do whatever is necessary to retain their trust.
- Q: What is your strategy for the future?
- A: It’s a well-known fact that 47% of our loan portfolio has, for a good number of years now, been related to projects outside Kazakhstan, which was a result of the strategy that the bank followed; the goal of that strategy was building a global bank. Now, in order to evaluate the quality of our assets, loan portfolio, and, most importantly, to examine the bank’s business with related parties, subsidiaries included, outside Kazakhstan, KPMG, along with our auditors, will perform an independent audit. This will take at least two and a half months and, once the results are out, one will be able to talk about a strategy for the bank and the group.
- Q: What’s your comment on Mukhtar Ablyazov’s open letter to President?
- A: Well, far be it from me to start a war of words with Mr. Ablyazov, but, in my opinion, he is not being fair. Why? For starters, it was him who, for a very long time, guided this institution and it was the decisions made by the Board of Directors that he chaired, that led BTA to where it is now. Secondly, he stated that he expected to receive one billion dollars from clients. I would be grateful if Mr. Ablyazov could name these clients and tell us how exactly they were going to deposit this money with BTA this February or March. If this is the case, we stand ready to accommodate them.
Honestly, I am quite astonished by these accusations of a cohort of government officials bent on destroying the bank. Excuse me, but I once used to work at BTA and have always had a lot of time for it. Let me point out that nobody was forced out of a job here, we still have the same Management Board and Board of Directors. The one and only exception would be my appointment.
If Mr. Ablyazov has any specific ideas on how we can help this financial institution out, then I think that, rather than issue public statements, he should simply come back, sit down and share them with us. Now, with respect to US$400 million in short-term liquidity from the National Bank that helped BTA stay afloat in October-November last year, let’s get some perspective here, because no other bank back then had to rely on this sort of assistance so much. All liquidity BTA asked for, BTA got. That’s why I think that statements like these by Mr. Ablyazov aren’t helpful, for he should know full well that we now have the same people working at BTA here, same people that worked under him. And a certain responsibility for these people, for decisions they took, rest firmly with him, with all due respect.
- Q: Is the fact that the government is now a shareholder a guarantee that BTA customers’ rights will be protected?
- A: First of all, the government is there to protect the rights and interests of all citizens. The money deposited with the bank is the people’s money. That is why, before anything else, the government wants to keep it safe and will demand transparency, including in actions taken by the Board of Directors and management, so that the money is not lost.
And, it doesn’t take a genius to figure out that financial institutions with direct or indirect government control are trustworthy, to say the least, as they are committed to an adequate single policy on deposits, lending and liquidity.
As for deposits, I think that people will be well advised to steer clear of high deposit rates. Unfortunately, what we see all too often is that people pay too much attention to price with too little regard for quality. For an individual investor, this approach simply won’t work. I accept that keeping track of a bank’s price policy and balance sheet may be tricky for most people, but, at the end of the day, one can just put those deposit rates together and see for himself how attractive that bank is.
Withdrawing cash and converting it into foreign exchange makes very little sense either, since devaluation has already happened. Keep it in your bank account instead.
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