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EBRD mulls buying into Kazakh state investment funds

Reuters, Nov 5, 2007

The European Bank for Reconstruction and Development (EBRD) is considering Kazakhstan's suggestion that it buy stakes in the country's state investment vehicles, the bank's country manager said on Monday.

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The Kazakh government has offered the EBRD to become a shareholder of the Development Bank of Kazakhstan and two funds controlled by the state Kazyna investment fund, as well as a possible stake in Kazyna itself.

The Development Bank of Kazakhstan, the largest of the three institutions, had a capital of about $680 million as of Dec.31 2006.

"We are working on this. Almost every week we have negotiations in Almaty, Astana and London," Andre Kuusvek, EBRD Director for Kazakhstan, told reporters.

The EBRD wants to make sure the entities are operated as regular businesses, he said.

"If we agree that these institutions are governed by commercial considerations and not by political ones, we will participate," Kuusvek said. "Otherwise we will not."

The bank was looking at stakes of up to 25 percent, he said. On Monday the EBRD also signed a deal to provide private Kazakh bank Caspian with a five-year $59 million loan. The proceeds will be used to finance small and medium-sized businesses outside of the capital Astana and commercial centre Almaty. "We were initially looking at a loan facility in tenge, but as tenge interest rates surged we and our customer decided to switch to dollars," Kuusvek said. Kazakh banks had been aggressively borrowing abroad until the July liquidity crunch that left many of them short on liquidity. Kuusvek declined to provide pricing details of Monday's loan.