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JSC Kazkommertsbank (JSCD)

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Thursday 02 October, 2003

JSC Kazkommertsbank

Stmt re Nat. Bank Resolution

JSC Kazkommertsbank
2 October 2003



We have received many inquiries from the holders of our Eurobonds regarding the
National Bank Resolution No264 dated 29 July 2003 ('the Resolution') prohibiting
Kazakh pension funds from holding securities issued by foreign special purpose
vehicles.

This was an unexpected decision for Kazkommertsbank considering the obvious
negative consequences of the Resolution for the Eurobond holders including
Kazakh pension funds. As a result of the Resolution, the eurobond price
substantially declined in view of the expected significant rise in the supply 
and decrease of the bond liquidity.


KKB management do not believe that the eurobonds issued through special purpose
vehicles are more risky than those issued in Kazakhstan. Among the holders of
KKB eurobonds, there are many large institutional investors, including US and
European pension funds, which accepted the KKB eurobond as eligible.


It is obvious that the eurobonds of Kazkommertsbank and TuranAlem are among the
highest yield and the most liquid on the local market. So the decision may
materially affect the overall return on investments and cause an excess
liquidity for pension funds which have already incurred losses as a result of
the strenthening of the Kazakh tenge.


For Kazakh banks, SPVs have always represented convenient instruments for
raising international capital due to the Double Taxation Treaty singed with,
among others, the Netherlands. Therefore, if the issuer were the Kazakh bank
itself, there would inevitably occur a higher tax burden related to the absence
of Double Taxation Treaties with certain countries, not to mention the amount
of work and time that would be required to apply these treaties.


The Association of Financiers of Kazakhstan is planning to discuss this issue
with the main participants of the securities market and, undoubtedly, to apply
to the National Bank with a request to work out a mutually acceptable decision.


Before the discussions are finalized, Kazkommertsbank is not planning to
substitute the obligor or take any other actions related to the change in the
structure of the eurobond issue. The final decision will be made after the
conclusion of the discussions on the abovementioned issue with the National
Bank of Kazkhstan. 
 
 


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