Panicky social media rock Kazakh banks after devaluation

Wed Feb 19, 2014 6:28pm IST

* Fake warnings about defaults lead to runs on deposits

* Hoax comes as government seeks calm after devaluation

* Central bank provided liquidity to tide banks over

By Dmitry Solovyov and Mariya Gordeyeva

ALMATY, Feb 19 (Reuters) - Kazakhstan's central bank on Wednesday accused anonymous "provocateurs" of stirring up panic on the market, still jumpy after last week's tenge devaluation, by using social media to trigger a run on deposits at three local banks.

The central bank devalued the tenge by 19 percent on Feb. 11 to about 185 per dollar to prevent large-scale foreign exchange speculation and adjust to a freer rouble float in neighbouring Russia, Kazakhstan's main trading partner.

The central bank and the government promptly stamped out speculative rates at street exchange offices, pledged to put rigid controls on food prices and froze tariffs of public utilities until May in a bid to keep inflation in check.

Sending another calming message to his Central Asian nation of 17 million, President Nursultan Nazarbayev said a weaker tenge was set to bolster exports, create new jobs and help keep economic growth at 6 percent of above this year.

But a wave of warnings distributed by unknown senders via text messages and some social networks on Tuesday gave the authorities a headache.

The messages, which claimed to come from employees of the central bank, said that three mid-sized banks - CenterCredit, Alliance Bank and Kaspi Bank - would go bankrupt in three days and advised people to withdraw their deposits from them.

National Bank Governor Kairat Kelimbetov said this had led to a wave of deposit withdrawals from the banks and prompted the central bank to provide liquidity to them in order to quell the agitation on the market.

"I think there are some forces with vested interests willing to rock the boat," he told a news conference.

"We have witnessed queues at the Kazakh banks. Yesterday these banks and the National Bank asked law-enforcers and the prosecutor-general's office to put an end to these actions and track down the provocateurs who spread this information."

GROUNDLESS SPECULATION

Kelimbetov said that all local banks had stable financial status and sufficient reserves in the tenge and foreign currencies to meet all their obligations to depositors.

He declined to give estimates for the volume of the withdrawn deposits.

Last month Alliance Bank set out terms for its second debt restructuring, saying it aimed to complete negotiations with investors by June.

On Tuesday, however, ratings agency Moody's downgraded Alliance Bank's long-term local and foreign-currency senior unsecured debt rating to pre-default "C" from "Ca".

Kelimbetov countered that the very fact that Kazakhstan's sovereign wealth fund Samruk-Kazyna, which wields assets worth tens of billions of dollars, still controls the bank meant that the lender is not on the verge of imminent bankruptcy.

"We believe, current speculation on the possible bankruptcy of CenterCredit, Alliance Bank and Kaspi Bank is groundless ... and people are simply being deceived," analysts of investment company Asyl Invest said in comments sent to Reuters.

The prosecutor-general's office said later on Wednesday it had established some of the persons suspected of "spreading false information" and planned to launch criminal proceedings against them.

These actions "aimed to shake the banking sector ... and whipped up social tension in society", it said in a statement. (Writing by Dmitry Solovyov)