Kazakhstan

From his secret hideaway, BTA Bank’s former Chairman Mukhtar Ablyazov says Kazakhstan’s government caused the default of the nation’s largest lender. Kazakh prosecutors want him for allegedly embezzling the bank’s money, Bloomberg reported. The biggest losers in the dispute may be investors who poured into the former Soviet state as crude oil rose to a record and the economy grew 10 percent annually for eight years.

Alliance Bank, Kazakhstan’s fourth- biggest lender, is in default after missing a principal payment of more than $10 million, the International Swaps and Derivatives Association said. A committee of credit swaps dealers and asset managers voted unanimously that a “failure-to-pay credit event” occurred after UBS AG asked for a ruling on May 15, ISDA said today on its Web site. The decision will trigger a settlement by auction of credit-default swaps linked to the Almaty-based lender, Bloomberg reported.

The quickening pace of Russia's rouble devaluation is piling pressure on the currencies of its neighbours and putting those without Moscow's sizeable reserves at risk of foreign debt default and further capital flight, Forbes reported. Investors are shying away from currencies such as Ukraine's hryvnia as the world economic slowdown crushes demand for its exports, global risk aversion shines a harsh light on Kiev's turbulent politics and Russia demonstrates its stranglehold on the country's energy supplies.

Kazakhstan sought to reassure investors on Wednesday that none of its banks would default on foreign debt although some bilateral loans may be restructured, the Guardian reported. Central bank Governor Anvar Saidenov said he was confident none of the local banks would default on its obligations. Kazakhstan has been hit badly by the global financial crisis and has announced a $21 billion aid package--roughly equivalent to 20 percent of gross domestic product--to help its oil-fuelled economy.