May 18, 2011 / 2:00 PM / in 7 years

UPDATE 1-Kazakh bank BTA asks UK to arrest former head

* BTA says billions misappropriated under Ablyazov

* BTA’s application “baseless” - Ablyazov spokesperson

* Bad results spur BTA’s judicial activity - spokesperson

* BTA Eurobond “finds base” after record fall - fund manager

* Fugitive BTA head earlier said wanted to join opposition

(Adds Ablyazov’s spokesman)

By Dmitry Solovyov

ALMATY, May 18 (Reuters) - BTA BTAS.KZ, Kazakhstan’s No. 3 bank by assets, has asked Britain to arrest its former head Mukhtar Ablyazov, from whom it seeks billions of dollars in compensation for alleged misappropriation.

One of Kazakhstan’s richest men, Ablyazov was part of Kazakh President Nursultan Nazarbayev’s inner circle and ran BTA, the country’s largest bank at the time, before he fell out with the state and fled to London in 2009.

After BTA defaulted during the global financial crisis in 2009, it was nationalised under a billion-dollar debt restructuring programme. Sovereign wealth fund Samruk-Kazyna now owns 81.5 percent of BTA, and creditors have the rest.

“BTA Bank has issued committal proceedings in the English High Court against its former Chairman, Mukhtar Ablyazov,” BTA Chief Executive Anvar Saidenov said in a statement.

“By those proceedings, the bank is seeking to have Mr. Ablyazov committed to prison for what the bank considers to be numerous breaches of injunction orders made against him in the court actions by which the bank is claiming over $4 billion in compensation.”

An Ablyazov spokesperson said: “Mr. Ablyazov considers this application to be baseless and will be defending it vigorously.” “These applications to court are nothing more than an attempt by the government of Kazakhstan and its State Fund Samruk-Kazyna to avoid responsibility for BTA’s impending default following nationalisation, and the subsequent misleading of the creditors throughout the debt restructuring process.”


BTA said last week it expected a small increase in net profit this year after completing its debt restructuring in 2010. [ID:nLDE74B00L]

But on Monday BTA‘S 2025 Eurobond issue traded at a record low 56 cents on the dollar.

A fund manager told Reuters on Wednesday that the sharp fall in the bond price had been due to “large differences between the unaudited accounts, which they (BTA) issued quite a few months ago, and the audited IFRS accounts which they issued last week.”

“The audited accounts gave the bank negative equity and negative cashflow,” the manager said, adding the bond “has found a base”. “All the negative news is now out, people are looking to maybe pick up a few bonds and it will trickle higher.”

Ablyazov told Reuters in an interview last August that he wants to work with opposition leaders to push for political change in Kazakhstan, Central Asia’s largest economy and oil producer which Nazarbayev has ruled for two decades. (Reporting by Dmitry Solovyov; Additional reporting by Carolyn Cohn in London; Editing by David Holmes and Louise Heavens)

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