MOSCOW, April 28 (Reuters) – Kazakh bank BTA BTAS.KZ said on Tuesday its new state-appointed management had uncovered a “speculative derivatives transaction” that may have been overstated on its balance sheet.
Which should be particularly worrying for Morgan Stanley.
BTA announced in a conference call on Tuesday that it had defaulted on $550m of notes owned by MS and another unnamed bank. MS and its partner had sought to accelerate payments on the notes earlier this month, triggering a frantic effort at debt restructuring at BTA.
How much MS should expect back on its rather large BTA exposure is as yet unclear. Reuters is reporting that the bank will announce a detailed set of proposals on debt restructuring efforts in May.
In the meantime, there should be plenty of questions about what exactly, the “speculative derivatives transaction” might be, and who on Wall Street, might have advised on its construction. All of this, of course, has resonant parallels with the slew of derivative blowups that accompanied the Asian economic crisis: where firm after firm came a cropper because of ridiculous one-sided bets they had entered into to juice-up their balance sheets’ in the boom years.
Few answers were yielded by a trip to BTA’s press service section of its website:
Division on work with Mass Media of BTA Bank appreciates your attention and time. In this respect we do our best for you to easily adapt in financial information flow as well as promptly and objectively cover economic events in the Republic of Kazakhstan. BТА will happily assist you in this respect as far as our bank always stands for the principles of informational transparence.
Joint work of our team and professional relations enable us to provide you with the most qualitative information and exchange opinions. This is why it is essential for us to keep in close touch with you: to receive inquires, telephone calls, e-mail letters or organize interviews with the experts of our bank as far as constant letter flow and lots of telephone calls shall prove your need in us.
The fact that we do one and the same job with you makes BTA press-service very responsible. We express gratitude to all our partners for fruitful cooperation and understanding of professional peculiarities of our work!