Injections ease pressure on Kazakh bank ratings-S&P

* Risk of bank downgrades seen "significantly reduced"

* Details of $5 bln government injection not yet released

By Olzhas Auyezov

ALMATY, Nov 7 (Reuters) - Kazakhstan's plan to inject liquidity into its banking sector has restored some confidence in the system and may help banks avoid further credit ratings cuts, a senior Standard & Poor's analyst said.

S&P said in June it could downgrade Kazakh banks due to declining asset quality after Kazakhstan, Central Asia's economic powerhouse, took a hit from the global credit crunch.

Last month, the government said it would inject up to $5 billion into the country's four largest banks to ease strains from global financial volatility.

"The risk of bank ratings downgrades which we have been talking about in the recent months has been significantly reduced by these steps, although not eliminated completely," S&P banking analyst Ekaterina Trofimova said late on Thursday.

The government has yet to announce details of the plan. So far banks have only announced the size of proposed injections.

Under the plan, the biggest bank BTA BTAS.KZ claimed a $2.3 billion share of the state package, while its biggest rivals, Halyk (HSBKq.L) and Alliance (ALLBq.L) asked for $500 million each. Kazkommerts (KKGByq.L) claimed a $300 million injection.

"We understand that these sums are just estimates and it's being discussed at the moment in what form and exact size the injections will be made," Trofimova said. "Also, we understand that the government will not necessarily provide all that money as some might come from existing shareholders."

She said S&P will closely watch how much of that money goes into different layers of capital such as common and preferred stock and subordinated debt, and how the injections measure against bad loans and upcoming debt repayments.

Kazakh banks, due to repay about $12 billion in foreign debt next year, could refinance or roll over at least 30 percent of that sum despite the liquidity squeeze, she said.

"But net capital outflow will still be significantly larger than in the last 12 months which will put considerable pressure on liquidity but should not destabilise the overall situation as long as deposits continue growing or at least remain stable."

The government, which directly or indirectly controls a third of total corporate deposits, will play a key role in maintaining their stability, Trofimova said. She also urged the government to support medium-sized banks. (Editing by Jon Loades-Carter)