UPDATE 2-Kazakh bank Alliance to cut debt by $2.5-3.0 bln

* Plans to reduce $4 bln debt by $2.5-3.0 bln

* Debt relief matches expected losses

* To complete process by November

(Adds timeframe, background)

ASTANA, July 9 (Reuters) - Kazakhstan's No. 4 bank, Alliance ALLBq.L, plans to reduce its debt to about $1 billion from the current $4 billion through restructuring, Alliance Chief Executive Maksat Kabashev said on Thursday.

London-listed Alliance, which halted debt repayments in April, said this week it had agreed with a creditor steering committee on the terms of debt restructuring that would help it avert bankruptcy. [ID:nL8489725]

"We plan to optimise our borrowings by $2.5-3.0 billion after the restructuring," Kabashev told reporters on Thursday.

The new debt terms will offer investors different options including a debt buyout at a 77.5 percent discount, as well as maturity extensions and the chance to convert debt into shares.

Alliance said in a separate statement later on Thursday that it would complete the restructuring process by November. After that, state welfare fund Samruk-Kazyna will buy a 66 percent stake in the bank and provide it with fresh capital.

Earlier this year, the bank said it would write down $2-3 billion due to bad loans and loss of assets pledged in favour of other companies.

Two other Kazakh banks, including the country's largest lender, BTA BTAS.KZ, are also in talks to restructure debt following asset quality decline and early redemption claims by creditors.

Kazakh banks borrowed heavily abroad before the global crisis to finance rapid expansion. But the economic slowdown and the collapse of the local property market have made it hard for borrowers and banks themselves to repay their debt. (Reporting by Raushan Nurshayeva; writing by Olzhas Auyezov; Editing by Mike Nesbit)