Two international banking industry associations appealed to Kazakh President Nursultan Nazarbayev to ensure that Kazakhstan’s troubled banks exclude trade finance debt from restructuring, Reuters reported on Friday.
Such a move would hurt the whole banking sector, the two groups, the Bankers’ Association for Finance and Trade (BAFT) and the International Financial Services Association (IFSA), said in an open letter to Nazarbayev.
The letter was reportedly also sent to BTA Bank, Kazakhstan’s largest bank, which is trying to restructure its $13 billion debt. The liabilities include about $3.6 billion in trade finance debt but the bank has yet to decide whether it would be included in the restructuring or not.
According to BAFT and IFSA, the common international practice is to exclude trade finance debt from restructuring.
“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 letter said. “Discounting repayment of those obligations will have a significantly negative impact on the entire Kazakhstan banking sector and, consequently, the Kazakhstan economy.”