Kazakhstan's Alliance bank says it plans to restructure its debt in order to meet its letter of credit (L/C) and other short-term liabilities.

This would entail Kazakhstan's fourth-largest bank restructuring its medium- and long-term debt in order to service its short-term liabilities.

Payments standstill

Alliance asked its creditors for a standstill on debt payments earlier this month because of its parlous financial position.

The bank is in this position because two costly transactions went wrong. The bank's former managers made those transactions, which involved US$1.1 billion of US treasury securities and two undisclosed financial institutions.

Investigations

The bank's new management saidin a transcript of a Q&A session with its creditors dated 17 April that it is"not confident that it has seen all relevant legal documents," related to the transactions.

They are currently under investigation by various authorities in Kazakhstan.

Questions

When asked about whether liabilities with an original maturity of less than one year would be paid, Alliance said in the Q&A session that it expected customer deposits, L/Cs and bills of exchange to be paid.

Asked how trade syndications would be dealt with, the bank said, "paying depositors and not paying L/Cs would be problematic."

For this reason, Alliance says it expects to continue to pay short-term commitments and restructure medium- and long-term liabilities.

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