Kazakh bank BTA quits KazPrime interbank index

* BTA will halt contributing to KazPrime

* KazPrime manager says index needed clean-up

ALMATY, July 30 (Reuters) - Kazakh bank BTA BTAS.KZ is suspending its participation in Kazakhstan's key interbank deposit indicator, KazPrime, due to its debt restructuring process, the Kazakh Stock Exchange said on Thursday.

The move leaves KazPrime KAZPRIME1 with the bare minimum of five participants it officially requires to compile data.

It also comes at a time when investor confidence in Kazakhstan, Central Asia's top economy, hard hit by the global crisis, continues to shrink following a string of borrower defaults.

BTA, nationalised in February, is in talks to restructure its $12 billion debt and has said its creditors may face losses of up to 97 percent.

"(BTA's) decision to quit (KazPrime) was made due to the need to complete the debt restructuring procedure," the stock exchange said in a statement.

Citigroup's (C.N) local unit left Kazprime earlier this month citing reduced credit lines available for its Kazakh counterparts. KazPrime participants quote rates for deposits with a minimum size of $1 million.

Andrei Tsalyuk, vice president of the Kazakh Stock Exchange which runs KazPrime, said the two banks' exit would not harm its operations and may only help it work more accurately.

"It (their exit) is the result of organisers' work ... aimed at making the indicator more representative," he said.

The other members of KazPrime are Kazakh subsidiaries of HSBC (HSBA.L), RBS (RBS.L) and UniCredit (CRDI.MI) as well as local lenders Kazkommertsbank (KKGByq.L) and Halyk (HSBKq.L).

Three-month KazPrime rate fell 51 basis points on Thursday to 8.93 percent per annum. (Writing by Olzhas Auyezov; Additional reporting by Olga Orininskaya; Editing by Rupert Winchester )