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Kazakh BTA may close if debt talks fail-watchdog

* Kazakhstan’s largest bank already in default on $550 mln

* BTA has said will present restructuring offer in May

* Depositors and individuals to be protected first-regulator

(Adds details)

By Masha Gordeyeva

ALMATY, April 30 (Reuters) - Kazakhstan's largest bank BTA BTAS.KZ may have to close if creditors refuse to restructure its debt, Yelena Bakhmutova, the head of the Kazakh banking regulator, told Reuters in an interview on Thursday.

State-run BTA has already defaulted on $550 million in loans to Morgan Stanley and another undisclosed bank and said it would make a debt restructuring offer in May.

Asked what would happen if a deal with more than 100 creditors fails, Bakhmutova said: “It would then be a question of bank’s viability.”

“According to banking laws ... if shareholders cannot and do not want to inject additional capital into the bank ... then liquidation takes place,” she said.

“Depositors and individuals will be protected first of all.”

Bakhmutova said it would be wrong to keep bailing out BTA at any cost.

“(Their) creditors are professionals,” she said. “They should have realised what they were doing.”

The government took over BTA in February making a $2 billion capital injection. Kazakh prosecutors then accused its former managers, who fled the country, of fraud, a charge they have denied.

(Reporting by Masha Gordeyeva; Writing by Olzhas Auyezov; Editing by Jon Loades-Carter)

((olzhas.auyezov@reuters.com; +7 7272 508500; Reuters Messaging: olzhas.auyezov.reuters.com@reuters.net)) Keywords: KAZAKHSTAN BTA/

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