London, November 10, 2005 — LAWFUEL – The Law News Network – White & Case’s Capital Markets team acted for JPMorgan, ING and UBS on JSC Kazkommertsbank’s (“KKB”) hybrid tier I capital issue, the first by any bank from the former Soviet Union. The issue was made possible by recent changes in Kazakhstan’s financial regulatory environment. KKB is Kazakhstan’s largest bank as measured by total assets. The issue is expected to be the first in a number of offerings as banks in Kazakhstan seek to increase their capital to support strong loan growth.
White & Case partner Francis Fitzherbert Brockholes explained: “Strong economic growth in Kazakhstan has fuelled bank lending in recent years and it has become increasingly apparent that local sources were insufficient to provide the capital to underpin this. Kazakhstan has a robust bank regulatory system and its regulator has now taken the lead by introducing regulations permitting a variety of innovative capital structures. There have been a number of local and international tier II issues in the past, but this is the first to take advantage of the new regulations allowing tier I hybrid capital.”
The $100 million offer deployed a Loan Participation Note structure, with the Perpetual 144A/Regulation S Notes issued via Kazkommerts Finance 2 B.V., a wholly-owned subsidiary of KKB. ING Bank N.V., London Branch, J.P. Morgan Securities Ltd and UBS Limited were the Joint Lead Managers for the offer.
Tim Jeveons, White & Case partner, added, “Although most Kazakh banks have sufficient capital, a lack of equity could put a brake on future growth if not addressed. There’s therefore been pent-up demand for more capital in the sector for some time, but the challenge has been to bring a workable structure to market. Now this has been done, we expect a number of further issues.”
White & Case fielded an eight-lawyer team to advise on the deal. Jointly led by partners Francis Fitzherbert-Brockholes and Tim Jeveons in London, the team consisted of London-based associates Peter Epp and Iuliana Dickerson, partner John Narducci and associate Paul Kuo in New York, along with partner Yuriy Maltsev and associate Maxim Grekov in Almaty.
About White & Case
White & Case LLP is a leading global law firm with nearly 2,000 lawyers in 38 offices in 25 countries. Our clients value both the breadth of our network and depth of our US, English and local law capabilities in each of our offices and rely on us for their complex cross-border commercial and financial transactions and for international arbitration and litigation. Whether in established or emerging markets, the hallmark of White & Case is our complete dedication to the business priorities and legal needs of our clients.