Kazakhstan nationalizes top banks as crisis bites

By Raushan Nurshayeva

ASTANA (Reuters) - Kazakhstan effectively nationalized its top bank BTA and sacked an ex-opposition leader as its key manager on Monday as a deepening financial crisis acquired political undertones in Central Asia's biggest economy.

The government said it will buy 78.14 percent of shares in BTA BTAS.KZ, which has assets of $31 billion, to boost its capital by more than $2 billion.

Separately the government said it was looking to rescue No.4 bank Alliance Bank (ALLBq.L) by buying 76 percent of the shares from its key shareholder for a symbolic sum of less than $1 and deposit $200 million into its accounts to boost liquidity.

Injecting political spin into the shake-up, the state financial regulator dismissed Mukhtar Ablyazov, BTA chairman and a former opposition leader, as part of the takeover.

Ablyazov, a founding father of a local opposition party who was briefly jailed in 2002, lashed out at the authorities after the move, accusing the state of "corporate raiding."

"Today's actions by the government against BTA represent abuse of power and corporate raiding," Ablyazov, who has no direct interest in BTA and denied being a shareholder, said in a statement whose authenticity was confirmed by BTA.

Like most local banks, BTA has been grappling to survive in tighter credit conditions after the global crunch ended oil-producing Kazakhstan's double-digit economic growth and crippled its once-vibrant banking industry.

A looming recession is now a worry to President Nursultan Nazarbayev who, while being criticized in the West for brooking no dissent, has been popular at home due to rising incomes.

Ablyazov's departure heralds a shift of power in Kazakh business, a worrying trend for investors relying on continuity of policy and balance of power in the Kazakh economy.

The move is a also worry from a broader economic point of view at a time when oil prices are falling and the central bank is expected to embark on a gradual depreciation of the tenge.

"The market will... fret over the impact on the state's balance sheet from the latest bank bail-outs, and whether this will threaten to diminish the sovereign's war chest of forex reserve," RBS analysts wrote in a note.

NATIONALISATION?

Thanks to years of uninterrupted economic boom and windfall oil revenues, Kazakhstan grew into Central Asia's biggest economy over past years and boasted growth of around 10 percent a year between 2000 and 2007.

The government, however, warned against describing Monday's announcements as nationalization, saying it would acquire BTA shares only on a temporary basis.

"This measure is not nationalization, it is temporary according to existing Kazakh legislation which stipulates the government will eventually exit its shareholder base," the government statement said.