LSE suspends trading in Alliance Bank

business and economy

By SRI ⋅ April 2, 2009 ⋅

(SRI) - The London Stock Exchange (LSE) suspended trading in shares of Alliance Bank, Kazakhstan’s embattled fourth largest bank, after the bank said its securities portfolio may be “seriously impaired.”

UK’s Financial Services Authority (FSA), the country’s financial regulator, suspended the trading after Alliance said its new government-appointed management discovered problems in its securities portfolio and that the bank would carry out an asset writedown. The FSA said it needed further clarification.

“The full extent of the impairment has not yet been ascertained. Alliance Bank is in the process of assessing the impact of it on its financial position,” Alliance bank said in a statement. “Alliance Bank is in the process of assessing the impact of it on its financial position.”

In a separate statement issued after the suspension, Alliance said the writedown would not hurt its creditors.

“This writedown is being carried out with the aim of improving the situation at the bank and will not affect its operations or ability to service debt,” it said.

Seimar Alliance Financial Corporation (SAFC), the Kazakh holding company with a majority stake in the bank, offered the government in February a 76 percent stake in the bank for KZT100 as SAFC itself would not be able to maintain its long-term capitalisation and stability.

The government has said it would close the deal only after Alliance’s creditors waive their rights to demand early debt repayment due to the change of control over the bank.

Alliance Bank which grew from a small regional bank to Kazakhstan’s fourth largest bank in mid-2000s, mainly by relying on aggressive lending policies and plentiful international credit, has been hit hard by the global financial crisis.