Restructuring Update 17-21 May 2010 Page 1 Disclaimer - - PowerPoint PPT Presentation

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Restructuring Update

17-21 May 2010

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• Disclaimer

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I Restructuring Plan

• a. Chronology of Events
• b. Update on the Financial Situation
• c. Outline of the Restructuring Plan
• d. The Role of Samruk-Kazyna

II Restructuring Terms

• a. Debt Eligible for the Restructuring
• b. Packages Description
• c. Treatment of Trade Finance Debt
• d. Description of the Recovery Strategy and

Recovery Units

IV Next Steps & Timeline

• a. Process under the New Restructuring Law
• b. Roadmap

Table of Contents

III BTA Business strategy

• a. Strategy overview
• b. Current structure and governance
• c. Corporate strategy
• d. SME strategy
• e. Retail strategy

Appendix

Page 4

I Restructuring Plan

• a. Chronology of Events
• b. Update on the Financial Situation
• c. Outline of the Restructuring Plan
• d. The Role of Samruk-Kazyna

Page 5

Background Information

CHRONOLOGY OF EVENTS

FMSA requires BTA to provision 25% of gross loans 1 Feb 2009 2 Feb 2009 1 June 2009 23 April 2009 22 July 2009 3 Sept 2009 SK injects KZT 212 bn and receives 75%

• wnership

Provisioning ratio raised to 58% A creditor accelerated a

• payment. Principal

payments suspended Interest payments suspended Steering committee appointed MoU signed 21 Sept 2009 7 Dec / 17 Mar 2010 18 Apr 2010 1 May 2010 Principal Commercial Term sheet and amendment signed Detailed term sheet signed Information memorandum published

Page 6

I Restructuring Plan

• a. Chronology of Events
• b. Update on the Financial Situation
• c. Outline of the Restructuring Plan
• d. The Role of Samruk-Kazyna

Page 7 Page 7 Historical Balance Sheet

Source: Company information

Key Comments

• Loan loss provisions, as calculated pursuant to the requirements of the financial regulator, have increased 9

times between 31/12/2008 and 30/09/2009.

• Substantial client deposit outflows in 2009 resulted in the weakening of BTA’s liquidity position which was

compensated by State and Samruk-Kazyna group support.

Recent Financial Performance

Assets Liabilities / Equity

Note: (1) Includes Principal Amount + Accrued Interests (2) Provision is based on FMSA Methodology (1)

(KZT bn) 31/12/2008 30/09/2009 Cash and obligatory reserves 112 44 Trading securities 146 756 Loans and deposits to other banks 34 70 Gross loans to customers 2,504 2,856 Provisions

• 214
• 1,959

Net loans to customers 2,290 898 Investments 213 234 Fixed and intangible assets 12 10 Other assets 109 122 Total 2,915 2,135 (KZT bn) 31/12/2008 30/09/2009 Securities sold by REPO 52 406 Bank accounts and client deposits 828 661 Debt securities issued 781 890 Bonds to S-K 663 Debt due to banks 623 551 Subordinated debt 159 132 Other liabilities 56 217 Total liabilities 2,498 3,522 Equity 417

• 1,387

Total 2,915 2,135

Page 8 Page 8

During the first 12 months of 2009, the Bank increased the level of its loan loss provisions by more than KZT

1.9 trillion (US$12.5billion) following the audit results, in accordance with regulatory provisioning requirements.

Loan portfolio parameters were also affected by the Tenge devaluation and reclassification of certain asset

types based on AFN rules. Key Comments Loan Portfolio Performance between YE-2008 and Q3-2009

Overview of Asset Deterioration

Gross Loans and Provisions by Business

(KZT bn) Gross loans Provisions (%) Gross loans Provisions (%) Corporate 1,865 161 8.6 2,182 1,861 85.3 SME 211 22 10.4 189 50 26.5 Retail 228 31 13.6 223 76 34.0 Total gross loans 2,304 214 9.3 2,594 1,987 76.6 Off-balance sheet exposure 1,035 5 0.5 1,039 121 11.6 Total gross exposure 3,339 219 6.6 3,633 2,108 58.0 31/12/2008 30/09/2009

Source: Company information Note: Provisions based on FMSA Methodology

Page 9 Page 9 Page 9 Samruk-Kazyna Debt Underwriting

Underwriting of KZT 645 billion of BTA - issued bonds Deposit of senior unsecured SK-issued bonds for use under the

repurchase facility arrangements with the NBK State Programmes

Long-term funding support for SME Long-term funding support for agricultural sector Long-term funding support for construction Long-term funding support for mortgage market

Other Liquidity Support from State

• r SK Group

Long-term loans Deposits on demand Term deposits

Source: Company information

671 42 7 20 37 2 156 112 Description KZT bn

The NBK and Samruk-Kazyna and its subsidiaries have provided direct liquidity support to BTA in the amount

• f position for KZT1.26 trillion (US$8.35 billion) through various forms of funding since February 2009.

Samruk-Kazyna has stated that no further support will be provided to the Bank before the restructuring process

is completed.

Government Support Funding

Extensive State Support

Samruk-Kazyna Equity Investment

Investment in order to acquire 75% of BTA equity

212 4.45 0.28 0.05 0.13 0.25 0.01 1.03 0.74 US$ bn (1) 1.41

(1) Exchange rate 1$ = 150.75 KZT

Page 10

Recapitalisation Requirement

KZTm USDbn Total Regulatory Capital @ 31/08/2010 (a)

• 1,802,632
• 12.26

RWA @ 31/08/2010 1,986,631 13.52 Minimum total Regulatory Capital (b) 199,303 1.35 Required capital injection (b) – (a) = (c) 2,001,935 13.62 Additional effect on Capital @ 31/08/2010 (d) 331,508 2.26 Income from Temirbank provision recovery 52,213 0.36 Other losses

• 67,501
• 0.46

Decrease of deductions in subsidiaries 95,982 0.65 New Tier 2 eligible subordinated debt 107,084 0.73 Additional income from provision recovery by 31/08/2010 143,729 0.98 SK capital increase by bonds (e) 670,963 4.56 Minimum required restructuring impact (c) – (d) – (e) 999,464 6.80 Profit from Haircut 948,462 6.45 Conversion into Equity under JP2 51,002 0.35 Total Creditors' Contribution to the restructuring 999,464 6.80

Exchange Rate 1USD = 147KZT

Page 11

As at September 1, 2010 the Bank expects to have a negative equity equal to KZT 1 803 billion (or $12.3

billion). As a result, the Bank requires capital injection of KZT 2 002 billion (or $13.6 billion) to meet regulatory requirements set by FMSA.

The current restructuring plan factors in an additional KZT 2 002 billion capital injection which comprises

the conversion of BTA bonds held by SK into equity for KZT 671 billion, KZT 999 billion contribution from creditors, and other components such as LLP recoveries.

Therefore, the release of provisions of KZT 143.7bn is a prerequisite for the Bank to meet FMSA prudential

ratios by September 1, 2010. The Bank’s management believes that upon the implementation of recently adopted loan restructuring policies, it will be able to release this amount by the end of August 2010.

Update on the financial situation

Page 12 Page 12

Bank started implementation of client-oriented restructuring program based on the specific needs of its

clients and adopting to the different business segments – Corporate, SME, and Retail:

For Corporate clients it is based on the restructuring principles approved by the Management Board of

the Bank on May 14th. The Bank takes an individual approach to each customer depending on its business model, segments of the economy and current status of the project to maximise provision release

For SME clients , the Banks approach is a soft collection program. This program is aimed at taking a

proactive approach in assisting the customers to solve their temporary problems and decreasing their debt burden using the State funding

In the Retail business segment in addition to the steps that have already been taken we are planning to

• pen a Call-Centre that will be working with retail customers at an early stage helping to improve the

results of collection agencies

In addition to the aforesaid the Bank is planning to enhance law enforcement actions towards delinquent

clients

• Given the programs addressed above and the successful Retail precedent, The Bank is confident that the

required provision release will occur over June July and August to address this shortfall

Update on the financial situation (cont’d)

Page 13

I Restructuring Plan

• a. Chronology of Events
• b. Update on the Financial Situation
• c. Outline of the Restructuring Plan
• d. The Role of Samruk-Kazyna

Page 14

The Bank’s regulatory capital will be restructured in order to comply with applicable local regulatory

capital requirements by way of the Restructuring Plan to be executed in accordance with Kazakhstan’s new restructuring law. The Restructuring Plan includes, among other things:

the release of existing claims currently held by certain financial creditors; the determination of claims and the claims adjudication process (if necessary); the operation of the allocation/reallocation mechanism among the packages; the allocation and distribution of cash and/or securities to the financial creditors. Samruk-Kazyna will swap its current claim for an 81.5% equity stake (less amounts held by residual

minority shareholders) only if the Restructuring Plan is approved by financial creditors holding at least two-thirds of the indebtedness subject to the Restructuring.

Pursuant to the Restructuring Plan, financial creditors’ claims will be cancelled and creditors will receive

cash, new debt instruments and 18.5% of the equity of the Bank, as contemplated by the Packages.

Post-restructuring the Bank will be left with a sustainable estimated debt burden of US$2.4 billion in

senior debt for SP1, US$436 million of OID debt for SP2, US$801 million in subordinated debt and US$700 million RCTFF.

The Restructuring is expected to provide a better outcome for financial creditors than would be the case

in an insolvent liquidation of the Bank.

The Restructuring Plan

Page 15

I Restructuring Plan

• a. Chronology of Events
• b. Update on the Financial Situation
• c. Outline of the Restructuring Plan
• d. The Role of Samruk-Kazyna

Page 16

Provided the Restructuring Plan is approved by financial creditors holding at least two-thirds of the

indebtedness subject to the Restructuring, Samruk-Kazyna shall:

Convert KZT 671 billion ($4.45 billion) of the debt owed to it by the Bank into common shares in the Bank; Thereby acquire 81.5% of the common shares in the Bank (adjusted downwards for any post restructuring

residual existing minority shareholders);

Transfer to BTA for onward transfer to financial creditors sufficient common shares allocated into senior

packages 1 and 2 and junior package 2 to ensure a 81.5%/18.5% split between itself and the financial creditors immediately following the Restructuring Date;

Give corporate governance undertakings (as described in the Information Memorandum); Give tag-along rights and receive drag along rights to the financial creditors in the event of a sale of a

shareholding in the Bank (subject to certain criteria as described on p57 of the Information Memorandum:

Ensure that any undertakings given by SK are also given by certain purchasers of shares from it until 2013.

The Role of Samruk-Kazyna

Page 17

II Restructuring Terms

• a. Debt Eligible for the Restructuring
• b. Packages Description
• c. Treatment of Trade Finance Debt
• d. Description of the Recovery Units

Page 18 Debt eligible for restructuring Excluded Creditors

All debt owed to financial creditors outstanding as at 28 May 2010 (the date proposed for the creditors’

meeting).

Debt Eligible for Restructuring

Financial creditors whose claims will not be subject to the Restructuring Plan include in particular: day-to-day creditors of the Bank, private deposit holders, commercial deposit holders.

($ millions) Allocation Principal Interest* Principal + Interest* Bilateral SP1 1,130 64 1,194 Syndicates SP1 1,094 22 1,116 Swaps SP1 22 23 ECA, Non-eligible and Excess Eligible TF SP1 1,373 24 1,397 Senior Eurobonds SP1 4,790 517 5,307 Sub-total (senior) 8,409 627 9,037

• Dom. Bonds

JP2 756 66 823 Dom Bonds - KPFs JP1 186 16 202 Perp Eurobonds JP2 400 48 448 Sub-total (junior) 1,342 131 1,473 Capped non-ECA TF SP3 700 12 712 ECA & Excess Eligible TF SP2 938 16 955 Sub-total (TF) 1,638 29 1,667 Total 11,390 788 12,178

*Estimated Accrued & Unpaid Interests as at 30 June 2010

Eligible Debt Stock

Page 19

II Restructuring Terms

• a. Debt Eligible for the Restructuring
• b. Packages Description
• c. Treatment of Trade Finance Debt
• d. Description of the Recovery Units

Page 20

Packages Description

ELIGIBLE CREDITORS US$ 12,178 MILLION*

SENIOR PACKAGE 1 US$ 9,037 MILLION* Cash payment equal to 11.1% of claims 8-year Senior debt (including 4-year grace) at a discount of 73% to claims. Interest rate of 103/4% in 2010-2014 and 121/2% thereafter (respectively 143/4% and 161/2% for KZT instruments) ** 15-year Subordinated debt (including 10-year grace). Interest rate of 7.2% p.a. (11.2% for KZT instruments), representing 6.12% of claims ** Recovery Units to participate in 50% of cash recoveries from provisioned and written down amounts, litigation and tax assets *** Allocation of 12.55% of equity SENIOR PACKAGE 2 US$ 955 MILLION* 11-year OID roll-over option (including 7-year grace) at a discount of 54.3%, fully accreted over 11 years. Interest rate of 3.7% in 2010-2017 and 3.3% thereafter (respectively 3.14% and 2.74% for EUR instruments) ** 15-year Subordinated debt (including 10-year grace). Interest rate of 7.2% p.a. (63/4% for EUR instruments), representing 6.46% of claims ** Recovery Units to participate in 50% of cash recoveries from provisioned and written down amounts, litigation and tax assets *** Allocation of 0.97% of equity SENIOR PACKAGE 3 US$ 712 MILLION* 3-year facility and 2-year amortisation Maximum amount of US$ 700 million Restricted to TF transactions meeting eligibility criteria JUNIOR PACKAGE 1 US$ 202 MILLION* Tenge-denominated debt Allocation: KPFs debt 20-year maturity including grace period of 15 years, at an interest rate of 8% p.a. Limited to KZT 28 billion JUNIOR PACKAGE 2 US$ 1,271 MILLION* Allocation: Perpetual bonds and subordinated bonds holders, excluding KPFs Allocation of 4.50% of equity

* Principal + Interest – The amounts in each package are still subject to allocation & reallocation changes ** The currency of new debt instruments be issued for creditors will be (i) in USD where restructured debt other than in KZT, (ii) in KZT where restructured debt in KZT or, at Creditors'

• ption, where restructured debt in any other currency, (iii) in EUR where restructured debt in EUR, and at Creditor's option

*** Excess recoveries over projected Business Plan for 2010-2011

Page 21 Allocation of Restructured Debt

Restructuring Allocation

($ millions) Principal & Interest Cash Senior debt (8 years) OID (11 years) Sub debt (15-20 years) RCTFF Equity Write-off Conversion Total Bilateral 1,194 134 328

• 74
• 658
• 658

Syndicates 1,116 130 318

• 72
• 596
• 596

Swaps 23 3 6

• 2
• 12
• 12

ECA, Non-eligible & Excess Eligible TF 1,397 163 399

• 90
• 745
• 745

Senior Eurobonds 5,307 570 1,390

• 315
• 3,032
• 3,032

Sub-total (senior) 9,037 1,000 2,441

• 553
• 5,043
• 5,043

Subordinated Debt 824

• 227

597 227 824 Dom Bonds - KPFs 202

• 186
• 16
• 16

Perp Eurobonds 448

• 120

328 120 448 Sub-total (junior) 1,474

• 186
• 347

941 347 1,288 Capped non-ECA TF 712

• 700
• 12
• 12

ECA & Excess Eligible TF 955

• 436

62

• 457
• 457

Sub-total (TF) 1,667

• 436

62 700

• 469
• 469

Total 12,178 1,000 2,441 436 801 700 347 6,453 347 6,800 Senior & Junior Packages - Instruments Allocation Creditors' Contribution

Page 22

II Restructuring Terms

• a. Debt Eligible for the Restructuring
• b. Packages Description
• c. Treatment of Trade Finance Debt
• d. Description of the Recovery Units

Page 23

• Debt considered by the relevant creditors to be Trade Finance Debt has been subject to adjudication by an independent

expert (as described in Schedule 2 of the Term Sheet on page 27).

• Trade Finance Debt (as determined by the independent expert) must fall into one of the following categories:
• All documentary letters of credit issued by the Bank;
• Any discounting of documentary letters of credit issued by the Bank and promissory notes issued as part of deferred payment

documentary letters of credit of the Bank;

• The provision of financing to the Bank in respect of the financing of a specific import or export where such financing was

specifically tied to that underlying trade transaction.

• The following types of transactions will be treated pari passu with all other senior unsecured debt:
• Loans provided for general corporate purposes where there was no specific underlying import or export trade transaction;
• Standby letters of credit and letters of guarantee relating to repayment of loans, rather than documentary letters of credit where

there is no underlying trade transaction

• Trade Finance Debt excluded from restructuring will comprise:
• Self-Liquidating Trade Finance Transactions
• Transactions that were made by BTA after 14 April 2009
• Transactions representing contingent liabilities of BTA crystalling after 30 June 2010
• The result of the adjudication has been:
• Non- OGSC eligible TF cUS $1bn
• OGSC (ECA) debt cUS$1.05bn
• Non-eligible TF debt cUS$0.85bn
• Excluded debt US$80m

Treatment of Trade Finance Debt

Page 24

Revolving Committed Trade Finance Facility

Purpose and key features:

• Designed specifically for creditors willing to carry on trade finance in Kazakhstan in exchange for zero haircut on a part
• f restructured debt (US$700 million)
• Aimed at building up a healthier trade finance portfolio for BTA
• Providing more control by the creditor community over the nature of BTA’s trade finance business
• Boosting BTA’s competitiveness in the market sector

Structure:

• US$700 million of existing indebtedness (Legacy Loan) to be repaid by BTA within 24 months through regular semi-

annual instalments starting from March 2011

• Funds repaid by BTA will be kept in a designated collection account and will be available for BTA over the life of the

RCTFF in order to originate new TF business. The collection account will be managed by a special agent on behalf of the participating creditors

• Tenor for new transactions will be 24 months and in any event no longer than 12 months following the termination of

availability period under RCTFF

• Each new utilisation by BTA under the RCTFF will be subject to the RCTFF agent being satisfied with the underlying

transaction as per the new origination criteria

• Any repayments to be made by BTA’s customers under new utilisations will be made solely to the collection account

and may be reused by BTA for new utilisations within the life of the RCTFF

Page 25

II Restructuring Terms

• a. Debt Eligible for the Restructuring
• b. Packages Description
• c. Treatment of Trade Finance Debt
• d. Description of the Recovery Strategy and

Recovery Units

Page 26

Description of the Recovery Units

Provision Write backs above net book value Litigation Recoveries Tax Assets Collection Account Interest

Payment under the Recovery Units

• Only if the cash is collected/recovered or tax relieved.

Provision write backs will only be paid when the cash amount is collected

• Not in 2010 and 2011 unless Recoveries realised in cash

exceed KZT134bn and KZT 103bn respectively

• Recoveries realised in cash after 1 Jan 2012 will be split

50% to the Bank and 50% to Recovery Unitholders

• Payments will be made quarterly
• After 10 years (or 12 years at BTAs option) if the

Recovery Units have not been paid in full, a valuation will be made of any residual potential value and paid to Unitholders

Page 27

Restructing and Recovery Strategy

• Strong Governance of Recovery Team

including Creditor involvement

• Signficant dedicated BTA personal

committment

• Strong advisory team of Lovells and PWC
• Good track record to date

Loan Restructuring Litigation Tax Assets Debt Restructuring

Page 28

III BTA Business strategy

• a. Strategy overview
• b. Current structure and governance
• c. Corporate strategy
• d. SME strategy
• e. Retail strategy

Page 29

• Focus on Increasing Liquidity
• Focus on Core Business and Client Segments
• Strengthen Corporate Structure and Governance
• Improve Risk management
• Build on Existing Banking Franchise
• Strengthen Treasury Operations
• Improve HR and Information Technology
• Optimise Branch Network
• Maximise cash-in from existing assets
• Extensive right-sized network of 22 branches and 230 cash offices in 66 town and cities across

Kazakhstan

• Highly skilled refreshed management team
• ‘One-stop-shop’ approach for clients combining current account, payment processing and depositry

services

• Salary Card programmes for staff of participating companies
• Advanced direct distribution channels infrastructure
• Partnerships with many transfer businesses
• Support of S-K

Strategy (General) Key strengths

Strategy Overview

• Following detailed examination of the financial and commercial situation of BTA, and in particular the loan

portfolio, BTA's new management has identified the following key strategic priorities:

• BTA’s new strategy will be focused on strong and sustainable profitability, rather than expanding the

asset base

Page 30

• Reinvigorated risk committees
• Thresholds and covenants on

related party exposure

• Creditor directors

CEO

Source: Company information

• Audit committee
• Risk committee
• Compensation committee

Board of Directors’ Committees Management Committees

BUSINESS UNITS CORPORATE SERVICES RECOVERY SUB-COMMITTEE (RSC)

New Governance Structure

Retail banking Finance and risk management Operations Corporate banking and investment projects SME banking Investment Activites

– Treasury – International

Asset restructuring Legal and compliance BOARD OF DIRECTORS Four SK nominees Two Creditor Directors Three Independent Directors Internal audit Key checks and balances mechanisms

Page 31 Evolution of Corporate Loan Portfolio and Provisions (KZTbn)

Source: BTA Bank

Current Provisioning

Corporate Business - Total Gross Loan Portfolio

Total

Gross Loan Portfolio (30/09/09 - KZTbn) Net Loan Portfolio (30/09/09 - KZTbn) Loan Loss Provisions (30/09/09 - KZTbn)

9% 10% 4% 84% 96% – CIS Portfolio in Kazakhstan LLP Ratio % CIS Investment portfolio 32% 57% 29% 43% 38% 31/12/08 30/09/09 Investment portfolio 1,865 2,182 11% 76% Portfolio in Kazakhstan 88% 39% 33% 46% 12% 31/12/08 30/09/09 1,704 347 161 1,835

Page 32 32

Corporate Business Strengths

Strong corporate franchise of c600 clients which was negatively affected by

the lending practices of previous management – to be rectified in restructuring

Close contact and support from the Government being the controlling

shareholder – participating in Government industrial support programmes, access to major national corporates Fundamentally sound corporate banking franchise

Highly skilled staff appointed to implement the new corporate strategy One of the most extensive geographical branch networks among the

competitors in Kazakhstan banking sector

Full range of banking products for Corporate clients

Extensive Network & Highly Skilled Management

Implementation of process automation through projects risk testing Tightening KYC, client on-boarding procedures, credit assessment and

client record management Implementation of Modern Operating and Risk Control Procedures

Page 33 Client Base Recovery

Restore Bank’s image Resume lending Get back permanent

clients of the Bank while restoring a share of deposits at the 2008 level

Promote Cash

Management products

Increase fee income from

cash and settlement services to be achieved by the return of major clients

Implement plans to

connect major clients (groups of companies) to the remote service via the Internet (BTA online)

Focus on Corporate Clients in Kazakhstan

Productivity Enhancement

Optimize the cost

structure

Optimize business

processes as a consequence of time cutting for the following:

• 1. Expert examination of

projects through introducing internal industry standards

• 2. Leverage direct

distribution and implementation of plans to connect major clients (groups of companies) to the remote service via the Internet (BTA online)

• 3. Introduction and

improvement of liquidity management products Active Management of Corporate Loan Portfolio in Kazakhstan

Restructuring through

possible change of credit terms (prolongation, cut

• f interest rates and
• ther)

Extra financing for

investment projects subject to adequate credit assessment Government Programs Implementation

Timely and full

disbursements, including those under programmes designed to complete housing construction

Participating in

government programmes to finance the construction sector, agro- industrial complex, [innovative, industrial and infrastructure projects]

National industrialisation

programme

1 2 3 4

Corporate Banking - Development Strategy

Page 34 SME Business at a Glance SME in Kazakhstan includes individual entrepreneurs and companies with assets not exceeding KZT459m and staff not exceeding 250, no more than US$25m in sales BTA is a major player in the Kazakhstan SME market:

• 12% current market share
• KZT 236 billion as at 30 September 2009
• 53,000 SME clients, including 12,000 borrowing clients
• KZT12.7m per customer in average
• 22,000 customer payments processed per day
• 18 loan products and 3 deposit products

Sales channels include 22 branches run by seasoned and loyal staff (branch managers have in average over 10 years banking experience and over 5 years of leadership at BTA). All processes are highly automated Loyal customer base especially centred in Astana and Almaty

SME Business Overview

Page 35 Evolution of SME Loan Portfolio and Provisions (KZTbn)

BTA has c. KZT88bn SME loans that are free from any provisions

Source: BTA Bank

Current Provisioning

SME Business - Total Gross Loan Portfolio

Total 91% 83% 9% 17% 211 189 31/12/08 30/09/09

Gross Loan Portfolio (30/09/09 - KZTbn) Net Loan Portfolio (30/09/09 - KZTbn) Loan Loss Provisions (30/09/09 - KZTbn)

189 141 90% 79% 10% 21% 31/12/08 30/09/09 22 49 98% 94% 2% 6% 31/12/08 30/09/09 11% 2% 11% 25% 8% 30% Own Government LLP Ratio % Government Own

Page 36

SME Business Strengths and Strategy

A combination of lending services with current account, payment

processing and deposit services

Highly competitive pricing and efficiency of processing payments of SME

clients (over 100 payments for SME clients per branch manager daily) “One-Stop-Shop” approach for SMEs

SME clients are a major customer base for the “salary” programmes

• Further automation of business processes, including scoring systems for

SME lending Synergies Development Strategy

Regain market share Increase proportion if SME loans provided to 30% - up from 7% Increase efficiency by reducing application processing time by half

Page 37 Gross Loan Portfolio (30/09/09 – KZTbn) Loan Loss Provisions (30/09/09 – KZTbn) Net Loans (30/09/09 - KZTbn)

Source: BTA Bank

Retail Business - Total Gross Loan Portfolio

KZT223bn KZT75bn KZT148bn

Current Provisioning

Consumer Loans secured by real estate Unsecured Loans Car Loans Mortgage Loans Other Loans 40% 31% 22% LLP Total Ratio: 34% 21% 33% 83 16 19 97 9 33 5 4 32 2 7 65 15 50 11

Page 38

Retail Business Strengths

Historically strong retail profile Successful restructuring will boost confidence among retail clients

BTA Brand

BTA relies on a strong retail network:

• 230 cash offices and 22 branches
• 931 АТМs and 142 cash and pay self-service terminals (3rd place)
• 11 currency exchange terminals

Strong customer base benefiting from cross-selling synergies with corporate and

SME customers

“Salary program” customers include major Kazakhstan companies (e.g., Arcelor)

Network and customer base

Innovative distribution technologies:

• Internet banking (over 50 services, over 1,000 new customers each month,

and total monthly volume for transactions of KZT250m)

• SMS banking (over 41,000 users and over 3,000 new customers each

month)

• Telebanking

Advanced Direct Distribution Channels Infrastructures

Partnerships with leading express transfer systems Western Union and Golden

Crown (local). Developing BTA proprietary transfer system “Faster” among CIS countries Strong Partnerships

Page 39 39

Key Principles

Deposits

First Priority

• Recovery of BTA’s lost share and leadership position (objective is to be a top three Kazakhstan

bank with market share of not less than 15% by 2014)

• Achievement of 2008 levels by attraction of middle and mass segment customers (portfolio

diversification – decrease of VIP segment share)

• Improve customer relations through loyalty programmes with current customers.

Non - credit transactions: Exchange transactions Payments Transfers

Focus on “non-credit” products as a source to support viability of all retail business infrastructure and leverage massive cross-selling potential due to vast existing client base of the Bank

• Emphasis on exchange transactions (recovery of share from 12% to 20%)
• Improve payment channel availability and range of services to increase market share in this

segment (from current 8% to 15% and share maintenance)

Cards

• Main communication channel with the customer and main access to the banking services via all

types of channels

• Attraction of new customers via salary programmes channel (from 600k to 1m customers)

Retail Business - Development Strategy

Page 40

IV Next Steps & Timeline

• a. Process under the New Restructuring Law
• b. Roadmap

Page 41 41

Kazakhstan Restructuring Law

Following the global financial crisis, one of the measures taken by the Kazakh government was to enact new legislation enabling it to take emergency measures in relation to Kazakh Banks. The new Kazakh restructuring law came into effect on 20 August 2009 and introduced a procedure for restructuring the financial indebtedness of banks. This procedure includes the following 12 steps: 1. The bank enters into an agreement with the AFN on the parameters of the restructuring (30/06/2009); 2. The board of directors of the Bank made a decision on restructuring the Bank's Financial Indebtedness (17/09/2009); 3. The Bank submitted this decision to the AFN; (18/09/2009) 4. The Bank submitted a draft of the outline (or potential outlines) of the Restructuring Plan to the AFN (18/09/2009). AFN approved the Restructuring Plan (26/09/2009). 5. An application is made to the Specialised Financial Court of Almaty to initiate the process (07/10/2009); 6. The Claims of relevant creditors are stayed and the bank's property is protected from execution and attachment in Kazakhstan (became effective 16/10/2009); 7. The Bank informs the creditors, customers, correspondent banks on restructuring; 8. Meeting of relevant creditors to approve a restructuring plan (requires approval of 2/3 in value of relevant debt) (expected to take place on 28 May 2010); 9. Restructuring plan is submitted to the AFN to ensure it conforms to the original plan (expected to take place in 3Q 2010);

• 10. Submission to court for approval in an open hearing (expected to take place in 3Q 2010);
• 11. Reporting to the AFN on the ongoing restructuring of the Bank, including the execution of arrangements under the

restructuring plan;

• 12. Court order confirming completion of the plan (expected to take place in 3Q 2010).

Page 42

Bankruptcy Legal Framework

The priority of payments on bankruptcy under Kazakhstan Law is as follows:

1.

Administrative and legal expenses of bankruptcy;

2.

Payments for tort claims involving harm to life or health;

3.

Payments due to employees as a result of their employment and related social security and mandatory pension payments;

4.

Kazakhstan Deposit Insurance Fund’s claims related to insured deposits;

5.

Claims of individual depositors relating to deposits and transfers, deposits made from pension fund assets and deposits of life insurance companies;

6.

Claims of non-profit organizations;

7.

Secured creditors of the bank (in the form of pledge);

8.

Tax liability settlements and repayment of borrowings from the state budget; and

9.

Unsecured claims of creditors

The Bank believes that no Kazakhstan bank placed into bankruptcy has had sufficient access to

capital to make any payments to creditors ranking below the Kazakhstan Deposit Insurance Fund.

The Bank believes that if it is placed into bankruptcy claimants are likely to receive severely reduced

returns on their claims or no return at all.

Page 43

IV Next Steps & Timeline

• a. Process under the New Restructuring Law
• b. Roadmap

Page 44

Sequence of Actions Summary

• SYNDICATED AND BILATERAL

CREDITORS

• ROUBLE NOTEHOLDERS
• DERIVATIVE COUNTERPARTIES
• DOMESTIC NOTEHOLDERS
• THE TRUSTEE ON BEHALF OF

EURONOTEHOLDERS**

• TRADE FINANCE CREDITORS

ACTION TO BE TAKEN BEFORE 28 MAY 2010* Claim Forms and Forms of Proxy will be available on the Bank’s website: www.bta.kz/en/investor 23 May - Bank and Steering Committee to determine whether material amounts of discrepancies as to quantum remain

EURONOTEHOLDERS

Deadline for Submission of Claim Forms 5.00pm (Almaty time) 19 May 2010 Deadline for submission of Forms of Proxy for Claimants’ Meeting 5.00pm (Almaty time) 19 May 2010 Register of Claims for voting purposes established by the Bank 26 May 2010 Voting instruction deadline for first meeting of Euronotes 5 May 2010 Euronoteholders’ Meetings 7 May 2010 Voting instruction deadline for adjourned Euronoteholders’ Meetings (if necessary) 10.00 am (London time) 21 May 2010 Adjourned Euronoteholders’ Meetings (if necessary) 24 May 2010

Claimants’ Meeting 28 May 2010

* All dates are indicative and subject to change ; Timing may differ for Euronotes held in DTC ** Deadlines for Trustees and Creditors with unresolved / disputed Claims will be 26 May 2010, not 19 May 2010

Page 45 Page 45 ROADMAP FOR THE RESTRUCTURING PROCESS

Dates are indicative only

Restructuring Process – Roadmap

Signing of the Memorandum of Understanding between the Bank and the Steering Committee 21 September 2009 Approval of the commencement of the restructuring process by the Court 16 October 2009 The Term Sheet is agreed between the Steering Committee and the Bank Term Sheet is published An updated list of the financial indebtedness (with estimated accrued & unpaid interest up to 30 June 2010) that will be subject to the restructuring is published 18 April 2010 20 April 21 April 2010 Distribution of Notice of each Noteholders’ Meeting 15 April 2010 Meeting of holders of Perpetual Securities 22 April 2010 Information Memorandum 1 May 2010 Trade Finance Adjudication process ends 6 May 2010 Investor’s Presentations Roadshows – Asia (Hong Kong, Singapore) and Europe (Zürich, Geneva, London) 17-21 May 2010 Noteholders’ Meetings Adjourned Noteholders’ Meetings (if required) 7 May 2010 24 May 2010 Adjourned meeting for holders of Perpetual Securities 25 May 2010 Claimants’ Meeting to approve the Restructuring Plan 28 May 2010 Submission of the Restructuring Plan and minutes of Claimants’ Meeting to the Court for approval 4 June 2010

Page 46

Restructuring Process – Roadmap

ROADMAP FOR THE RESTRUCTURING PROCESS

Dates are indicative only Notice of the Court’s final hearing regarding the Restructuring Plan to Claimants At least 14 days in advance of the final hearing Settlement Instructions Deadline (for submission of all Settlement Instructions) 25 June 2010 Hearing of the Court to approve the Restructuring Plan and the approval of the Restructuring Plan by the Court 2 July 2010 The Bank publishes details of the Court’s decision 9 July 2010 Bank satisfies remaining Conditions Precedent TBD –likely September Restructuring Date (distribution of cash, New Notes, Shares and GDRs and Listing of the New Notes on an Approved Stock Exchange and the KASE as applicable) TBD –likely September The Court’s order confirming that the Restructuring Plan has been carried out and the Restructuring is complete TBD Deadline for Listing the GDRs on an Approved Stock Exchange 30 December 2010 Implementation of the Restructuring Plan Distribution of cash and securities TBD –likely September

* Indicative Timing

Appendix

Appendix A – Economic data

Page 49 Page 49

Stable Macroeconomic Fundamentals

Key Economic Indices of Kazakhstan International Reserves as of April 2010 amounted to US$29.4bn National Oil Fund as of April 2010 was equal to US$25.8bn

Source: Bloomberg

2005 2006 2007 2008 2009 2010F Real growth of GDP (%) 9.7 10.7 8.5 3.3 1.1 1.5-2.0 Inflation (%) 7.6 8.6 10.8 9.5 6.2 6.0-8.0 Refinancing rate of the National Bank of Kazakhstan (%) 8.0 9.0 11.0 10.5 7.0 7.0 Average annual rate of KZT/USD (tenge) 132.9 126.1 122.6 121.1 147.5 150.0 Aggregate foreign debt (US$bn) 43.4 74.0 96.4 106.0 106.7 111.3 Budget deficit (% of GDP) +0.6 +0.6

• 2.2
• 2.1

3.1

• 4.1

Foreign public debt (US$bn) 2.3 4.2 6.7 2.2 2.2 n/a National Oil Fund assets (US$bn) 8.1 14.1 21.0 26.6 24.4 25.3 Public gold and foreign currency reserves (US$bn) 7.1 16.0 17.6 22.9 23.2 25.8

Source: National Bank of Kazakhstan, National Statistics Agency, Ministry of Economy and Budget Planning of RK

Page 50

2% 7% 2% 5% 6% 5% 1% 1% 4% 1% 5% 11% 1% 1% 1% 1% 1% 2% 1% 1% 2% 1% 1% 4% 4% 2% 1% 1% 1% 20% 17% 4% 4% 5% 6% 6% 7% 5% 8% 5% 4% 14% 1% 21% 5% 8% 0.4% 0.4% 1% 0.4% 1% 1% 0.2%

0% 5% 10% 15% 20% 25% 30% Average France Netherlands Norway Canada Germany Austria Greece

• S. Korea

UK Hungary Kazakhstan Finland Russia Sweden Ireland US % of banking assets Liquidity Loans Equity Asset purchase Guarantees Other

Bail out of banking

Kazakhstan is among leaders worldwide in terms of support to banking sector…

Page 51 Page 51

Parent company Level I Level II Level III Level IV

SWF Samruk-Kazyna

Key Comments

• “Samruk-Kazyna” Sovereign Wealth Fund is 100% owned by the Government of the Republic of Kazakhstan.

The Board of Directors is chaired by the Prime Minister of Kazakhstan.

• SWF Mission is to encourage the growth of national welfare and strengthening of sustainable development,

diversification and modernization of the economy. Assets

Financial highlights US$bn Consolidated assets 73 as a % of GDP 70% Consolidated equity 32 Consolidated revenues for 2008 27 as a % of state budget 95%

• 100% owned by the Government of the Republic of Kazakhstan.
• Headquartered in Astana.
• As a Group employs more than 300,000 employees.
• Consolidates more than 400 companies.
• The Group is well diversified with strong positions in the following industries:

Energy, Mining, Telecom, Transportation and Finance & Banking. Samruk-Kazyna 42 subsidiaries & associates 113 subsidiaries & associates 186 subsidiaries & associates 63 subsidiaries & associates Major Subsidiaries & Associates KazMunayGas – www.kmg.kz (key national oil & gas company) Kazakhstan TemirZholy – www.railways.kz (national railway company) Kazakhtelecom – www.telecom.kz (national telecom operator) KEGOC – www.kegoc.kz (national transmission grid operator) KazPost – www.kazpost.kz (national postal service) Air Astana – www.airastana.kz (internationally established and managed national airline) DBK – www.kdb.kz (specialized financial institution to provide financing) Alliance Bank – www.alb.kz (commercial & corporate banking) KazAtomProm – www.kazatomprom.kz (nuclear holding company) Samruk-Energy – www.samruk-energy.kz (energy assets holding) Каzаkhmys – www.kazakhmys.kz (international mining and metals company) ENRC – www.enrc.kz (diversified natural resources group) Astana Finance – www.af.kz (financial holding) Investment Fund of Kazakhstan – www.ifk.kz (private equity investments fund) National Innovation Fund – www.nif.kz (venture and innovation funds) Kazyna Capital Management – www.kcm-kazyna.kz (private equity and funds-of-funds) Entrepreneurship Development Fund Damu – www.fund-damu.kz (SME fund)

Appendix B – Business plan

Page 53 Comments 2009-2010: Impact on gross loans Write-off (KZT1.4tr in 2009) Recovery (35bn in 2009, 134bn in 2010 and 102bn in 2011) Run-off of the old “Good Bank” and the old loans restructured Exposure of the gross loan portfolio to Corporates is significantly reduced in 2014 (50% of the total loan portfolio vs. 81% in 2008) As of 31/12/2014, the portfolio would be split as follows: Retail: ca. KZT350bn (20%) SME: ca. KZT525bn (30%) Corporate: ca. KZT900bn (50%) Evolution of Gross Customer Loans Over 2008-2014 (KZTbn)

Evolution of Gross Customer Loans Over 2008-2014

2009-2014 CAGR: 8.2%

1,262 1,236 1,270 1,345 1,512 1,755 10% 15% 17% 18% 19% 20% 20% 9% 17% 18% 22% 25% 27% 30% 81% 68% 65% 60% 56% 53% 50% 2,304 2008 H2 2009 2010 2011 2012 2013 2014 Retail SME Corporate

Page 54 Breakdown of 2014 Customers Deposits

Deposits on demand 9% Term deposits 91% 2014 RETAIL DEPOSITS: KZT473bn 2014 SME DEPOSITS: KZT470bn

Evolution of Customers Deposits Over 2008-2014 (KZTbn)

Evolution of Customers Deposits Over 2008-2014

596 699 858 1,063 1,350 1,715 28% 33% 23% 24% 26% 27% 28% 27% 15% 17% 17% 19% 20% 23% 45% 51% 60% 59% 55% 53% 49% 817 2008 H2 2009 2010 2011 2012 2013 2014 Retail SME Corporate 2009-2014 CAGR: 23.5% 2014 CORPORATE DEPOSITS: KZT772bn Current accounts 61% Term deposits 39% Current accounts 76% Term deposits 24%

Page 55

2008A H1 09 H2 09 2009E 2010E 2011E 2012E 2013E 2014E Net Banking Income 167,467 (1,214) (122,430) (123,645) (78,587) (15,789) 36,485 57,090 97,313 Operating Expenses (46,577) (18,088) (17,192) (35,280) (29,510) (34,635) (41,395) (48,035) (29,194) Gross operating profit 120,890 (19,303) (139,622) (158,925) (108,097) (50,424) (4,910) 9,055 68,119 Cost income ratio (%) 27.8% n.s. n.s. n.s. n.s. n.s. 113.5% 84.1% 30.0% Provisions (105,092) (1,499,092) (440,893) (1,939,986) 107,818 68,329 29,398 9,652 (3,390) Net operating profit 15,798 (1,518,395) (580,516) (2,098,911) (280) 17,905 24,488 18,707 64,729 Restructuring impact

• (8,588)

(8,588) 934,162 (3,900) (3,900) (3,900) (3,900) Taxes (3,111)

• Net income

12,687 (1,518,395) (589,104) (2,107,499) 933,883 14,005 20,588 14,807 60,829 TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE 2008A H1 09 H2 09 2010E 2011E 2012E 2013E 2014E К1-1 (Tier 1-deduct° / Total Assets - min 5% 13.9% (48.9%) (85.7%) 5.3% 5.1% 5.4% 5.6% 6.3% К1-2 (Tier 1-deduct° / RWA - min 5%) 9.7% (38.2%) (75.6%) 6.4% 6.2% 6.5% 6.7% 7.3% К2 (Total Capital / RWA - min 10%) 13.2% (38.2%) (75.6%) 11.2% 10.8% 11.3% 11.3% 12.8%

Key Capital Ratios Profit & Loss

Forecasts - Profit & Loss

Profit & Loss (KZTm)

Appendix C –Governance and Risk Management

Page 57 Page 57 The Bank’s entire governance structure has been reviewed in a company-wide effort to effect corporate governance

• reforms. Some changes and reviews applied are aimed at reducing risk and strengthening internal controls

Functions and rules of procedure General Meeting

• f Shareholders

Board of Directors Management

• Decisions regarding the composition and terms of

reference of the Returning Board and the Board of Directors

• Review and approval of the Bank’s performance
• Capital increases
• The Board of Directors is the supreme authority in

the affairs of the Bank between shareholders’ meetings, and in that period holds decision-making rights on all important or outstanding issues

• The Board ensures that all operations are in

compliance with the laws and regulations governing its activities

• The Board determines the Bank’s strategy and

appoints CEO and the Management team

• Execution of Bank’s strategy
• Day-to-day running of the Bank, appointment of

senior and branch management

Source: Company information

The bank aims to implement a corporate governance framework consistent with international best practices Changes implemented

• New BoD was elected (9 members with 3

independent)

• Corporate calendar introduced under which BoD

meets three times a month (once physically, twice remotely)

• More active interaction of BoD with management
• Newly created appointments and remuneration

committee

• New management board appointed
• Greater emphasis on committee structure as well as

risk management, including credit risk management

• Samruk-Kazyna acquired controlling stake of 75.1%

Governance

Page 58 Page 58

Assets and Liabilities Committee

• Regulates internal and external audit, monitors efficiency of

internal controls system

• Must be composed of at least three members, minimum one

member should be independent

• Committee holds meetings on an ad hoc basis, but not less

than once per quarter

Board of Directors

Advisory body supporting BoD decision-making on analysis,

assessment and control of risks

Minimum two members of BoD and Chief Risk Officer Meetings on a monthly basis Advisory and consultative body, established to increase the

Bank’s performance management by developing guidelines for HR and motivation policies

Minimum three BoD members and two independent directors

Disciplinary Committee Ethics Committee Product Committee Budget Committee Client Committee of Head Office Problem Loans Committees Credit Committees

Source: Company information

• See next page
• Execution of assets and liabilities policy
• Setting pricing for banking products
• Weekly meetings
• Responsible for promoting sales growth
• Portfolio diversification
• Weekly meetings
• Execution and approval of Bank’ s budget
• Weekly meetings
• Development/modification of banking products
• Weekly meetings
• Development of corporate ethics standards
• Ad hoc meetings
• Considers investigation reports and applies

sanctions to Bank’s officers

• Ad hoc meetings
• Monitor portfolio to reveal payment delays
• Minimise non-payment risks
• Work on NPL recovery
• Weekly meetings

Management (CEO) Audit Committee Appointments and Remuneration Committee Risk Committee

Governance (cont’d)

Committee Structure Ensures Stronger Risk Governance

Page 59 Page 59

Source: Company information

Portfolio diversification Priority given to SME loan business and key agricultural and industrial companies with a focus on full production cycle businesses Financing state-owned companies Focus on export and high added value industries No new real estate projects, start-up investment projects, and non-residents (including off-shore companies) Development and introduction of MAC (maximum allowable concentrations) of portfolio risks New borrower risk assessment system Decrease of lending limits by products Mandatory income confirmation Focus on non-secured lending to employees of corporate clients (salary projects) LTV within 0,5 – 0,75, obligatory initial instalment (e.g. in mortgage and car loans) Closing of a number of risky lending programmes (e.g. secondary market auto lending) Accreditation of companies to employ the borrowers Obligatory examination of clients through credit history bureau Increase of amortisation ratios by all types of real estate (from 30% up to 50% depending on the region) Setting required minimum levels for liquid collateral (deposits, real estate, insured cars and equipment) – at least 70% in the collateral structure Setting limit on a share of land lots and subsurface use rights in collateral – not more than 30% of financing Immovable property under construction may not be taken as collateral if completed less than 80% Any collateral suggested for loans exceeding US$3m will need to be reviewed by the Bank’s special collateral valuation department More rigorous approach towards using the services of independent appraisers. Independent appraisers to work with the Bank subject to regular accreditation

Corporate and SME business Retail Tightening collateral policy Key Parameters of New Credit Policy

Risk Management

New Credit Policy

Page 60 Page 60

Source: Company information

Risk Management (cont’d)

System of Credit Committees

Retail SME Corporate

• Loan applications of SME

clients over branch limits (max US$5m for investments, US$10m for working capital replenishment)

• Meets twice a week
• Control over lending

procedures of the Bank, issuance of any financing (including SME super limit)

• Credit methodology

(regulations)

• Set limits for subordinate

credit committees and contractor banks (over US$ 5m for investments, US$ 10m for working capital replenishment )

• Meets twice a week

Credit committee

• f branch

network (CC BN) Head Office Credit committee (CC HO)

• Decisions on retail financing

issuance in accordance with the Bank’s credit policy

• Decisions on non-standard,
• ver-the-limit loans (in

excess of US$1m)

Major Credit Committee for Head Office Retail Business

• Decisions on retail financing

issuance (less than US$1m – considers over-the-limit, non standard applications)

• Improvement of Bank’s

credit procedures

• Meets daily

Minor Credit Committee for Head Office Retail Business

• Authorized to make

decisions within set branch loan limits on one borrower

• Loan applications and CIS

countries projects

• Preliminary establishment of

loan limits on regional banks and subsidiary banks

• Meets weekly

Credit committees

• f branches

Regional Credit Committee (RCC)

• Loans issuance within set

limits depending on branch portfolio and contingent liabilities quality

Credit committees

• f branches

and authorized persons

Credit Committee System

The Bank Board of Directors MUST approve ANY loan where:

• the borrower has any type of special relationship with the Bank
• the Borrower is affiliated to the Bank
• the loan is an exception from the Bank credit policy
• the loan involve any type of state interest

Page 61 Page 61 Risk Management team has responsibility for Credit, Operational, Regulatory and Compliance Risks Chief Risk Officer Head of Credit and Operational Risks Department Credit Risks Division of Head Office

Corporate business risks Loan portfolio monitoring Banks and financial institutions risks

Credit Risks Division of SME

Small business risks Branches analysis and monitoring Branch risk-management Methodology of retail products Retail business monitoring

Risks of Retail Business and Underwriting Division

Credit applications analysis

Operational Risks Division

Technological risks Continuous activities management Identification and monitoring of operational risks Methodology

Source: Company information

Chief Executive Officer

Risk Management (cont’d)

Current Organisation

Page 62 Page 62

Real estate investments 16.2% Industrial construction 8.9% Mortgage 3.7% Oil and gas 13.3% Wholesale trade 11.0% Agriculture 5.6% Retail excl. mortgage 5.3% Other 19.9% Housing construction 16.1% 76.1 50.3 57.3 (6.4) (8.7) 41.1 32.2 33.8 30.2 (4.8) (20.4) 42.6 (40) (20) 20 40 60 80 100 2004 2005 2006 2007 2008 Jul-09 (%) New housing Resale Source: Company information

Access to inexpensive sources of financing and

rapid growth of real estate prices resulted in excessive exposure to the real estate sector

The Bank financed risky real estate projects: Start-up companies without expected steady

cash flows

Speculative land deals performed at above-the-

market valuations

Development projects in CIS countries related to

former shareholders

Most of these projects are considered to be

non-performing

Projects that are still viable require additional

financing to implement them completely

36% of gross loans relate to Real Estate Note: 1 % (decrease) / increase on end of previous period Source: Company information Source: The Agency of Statistics of the Republic of Kazakhstan

Risk Management (cont’d)

Focus on the Real Estate Market

Key Highlights Loan Portfolio - Industry Breakdown Housing Prices Development 1

Appendix D – RCTFF

Page 64

• BTA and the Steering Committee agreed that the classification of debt within the former trade finance portfolio of BTA was

agreed to be confirmed by an independent adjudicator (Watson Farley & Williams).

• Any creditor who thought to be a trade finance creditor was invited to present claims for adjudication
• Adjudication method:
• Individual analysis of each transaction submitted for adjudication
• Review of BTA and creditor data and underlying transaction documents as well as any related correspondence and

documentation provided by either BTA or the relevant creditor

• Classification of transactions as Non-OGSC Eligible Trade Finance Debt, OGSC Debt, Non-Eligible Trade Finance Debt or

Excluded Debt (other than self-liquidating/cash covered which are determined by BTA)

• Discussions with both BTA and the relevant creditor with a view to settle disputes in respect of quantum of claims
• Adjudication results:
• Non-OGSC Eligible TF Debt: c.US$1.1bn
• OGSC (ECA) debt: c.US$ 1.05bn
• Non-Eligible former TF debt: c.US$c.0.85bn
• Excluded debt: c.US$80m

Trade Finance Adjudication

Page 65

Allocation of former TF in restructuring

• Trade Finance Allocation Parameters
• Non-OGSC Eligible Trade Finance Debt

in the amount of up to US$700m will be restructured through a Revolving Committed Trade Finance Facility (RCTFF). Any excess Non-OGSC Eligible Trade Finance Debt may be allocated to Senior Package 2 [up to US$288m], and Senior Package 1

• ECA and other government-sector

creditors may participate in Senior Package 2 [up to US$650m], and Senior Package 1.

• Non-Eligible Trade Finance Debt (loan

repayment guarantees and general- purpose loans) will be restructured through Senior Package 1

Non-ECA Eligible Trade Finance Debt Senior Package 3 (RCTFF) Senior Package 1 Senior Package 2

US$0.7bn

Excess Eligible Trade Finance Debt

Allocation of Eligible and Non-Eligible Trade Finance Debt c.US$1.1bn

ECAs/other Government Sector Debt

C.US$0.4bn

BTA Trade Finance Department

c.US$1.05bn

Excluded Transactions

c.US$3bn

Non-Eligible former TF debt (loan guarantees and general-purpose loans)

c.US$0.85bn

IFI Loans

c.US$0.150bn

Page 66

Revolving Committed Trade Finance Facility

BTA Collection Account Eligible Customer Eligible Customer Confirming Bank Letter of Credit Confirmation LC application Repayment of Restructured Debt Agent Repayment

Purpose and key features:

• Designed specifically for creditors willing to carry on trade finance in Kazakhstan in

exchange for zero haircut on a part of restructured debt (US$700 million)

• Aimed at building up a healthier trade finance portfolio for BTA
• Providing more control by the creditor community over the nature of BTA’s trade finance

business

• Boosting BTA’s competitiveness in the market sector

Structure:

• US$700 million of existing indebtedness (Legacy Loan) to be repaid by BTA within 24

months through regular semi-annual instalments starting from March 2011

• Funds repaid by BTA will be kept in a designated collection account and will be available

for BTA over the life of the RCTFF in order to originate new TF business. The collection account will be managed by a special agent on behalf of the participating creditors

• No new funding will be available for BTA under the RCTFF other than the funds paid by it

into the collection account in repayment of the Legacy Loan

• Tenor for new transactions will be 24 months and in any event no longer than 12 months

following the termination of the RCTFF

• New originations will include traditional trade finance instruments, such as:
• Letters of credit
• trade-related payment guarantees
• Certain limited funding for costs relating solely to specified trade transactions
• Reimbursement undertakings
• Each new utilisation by BTA under the RCTFF will be subject to the RCTFF agent being

satisfied with the underlying transaction as per the new origination criteria

• Any repayments to be made by BTA’s customers under new utilisations will be made

solely to the collection account and may be reused by BTA for new utilisations within the life of the RCTFF

Appendix E – IT

Page 68 Page 68

Technology strategy

Actions for the future Highlights from the past Our strategy Customer service excellence Delivery of effective and efficient change Cost control is critical Maintain focus on risks and controls Manage and motivate

• ur people

Technology

Duplicate critical components

with the intention of increasing reliability of the systems

Capacity planning - monitoring

system for threshold values

Take advantage of modern,

proven and robust technology

Staff development - turning

knowledge into skills

Operations

Customer service must differentiate

from the competition

Focus on process and control

improvement

Hiring freeze and some reductions

Source: Company information

Technology

Use modern technology for reduce

capital and operating expenses

Increase quality of data, provide

consistent classification and resolve data-reconciliation issues

Develop Hardware refresh strategy

based on End Of Support notifications from vendor

Operations

Reduce gaps between business

and IT

Focus on product development

and service availability

Information Security

management: ISO/IEC 27001:2005 certification

Page 69 Page 69

IT Systems Current Landscape

Retail Business front-end applications

FEB CTL Kastle ULS*

Back-end applications

IBSO HQ ORACLE e-Business Suite** Trade Innovation

Customer self-service applications

Internet Banking SMS Banking

Data consolidation and Reporting applications

IBSO GL MIS IBSO Branch Siebel CRM SAS OpRisk***

Branch automation solution Operation Risk management Customer Relationship management Online Money Transfer application

Faster

* Migration phase ** UAT phase *** Statistics gathering phase

Source: Company information

Robust modern technological environment is able to support large transaction volumes and product innovation