OREANDA-NEWS. April 28, 2009.
1. What is the position of other creditors, in particular the bondholders?
On 1st April 2009 Alliance submitted a communique via Clearstream and Euroclear requesting bondholders to identify themselves. So far approximately 20% of the bondholders have been identified. Notifications of a payment default have also been sent to the Trustees, but no useful feedback has been received from them so far.

Two categories of bondholders have not yet been approached by Alliance: the domestic bondholders and bondholders of the Russian Roubles bond issue. Since the beginning of March 2009, the trading volume for Alliance’s bonds (including Eurobonds and DPR notes) was approximately US2.6 billion. 45% of this volume represented trading in perpetual securities.

2. What will Alliance do vis-a-vis payments to bondholders?
Prior to the standstill request Alliance has serviced all its interest payments (except a payment to the Calyon syndicate which is expected to be made soon) and its current intention is to continue doing so during the standstill period. Interest was paid on the local bond due 10 April 2009 despite the principal not being paid. We understand that FMSA consents to Alliance continuing to service interest on its debt obligations.

3. Will the FMSA support the standstill?
We understand that FMSA will support the standstill.

4. Has the agreement between the FMSA and Alliance on the FMSA special regime
been signed and would the creditors be allowed to see a copy?
No, the agreement has not been signed yet. Several drafts of the agreement have been exchanged and Alliance anticipates that it will be signed shortly. Alliance’s advisers to confirm whether or not the agreement could be disclosed to the creditors or whether that would be prohibited by Kazakhstan law.

5. What is the situation concerning the US 1.1bn of the US treasury securities?
Transactions involving \\$1.1bn of the US treasury securities involved two financial institutions. The names of those institutions cannot be shared at present. The newmanagement of Alliance is not confident that it has seen all relevant legal documents. The transactions are currently the subject of high level investigations by various authorities in Kazakhstan.

6. What is the nature of the transactions?
It is understood that the two financial institutions gave loans to offshore companies. Alliance acted as a guarantor for the borrowers; the US treasury securities were pledged as collateral for the guarantee. Alliance’s contingent liabilities have not been reflected in Alliance’s financial statements, however the US treasury securities were reflected as an asset with no record of them being pledged.

7. What was the commercial benefit to Alliance?
Alliance cannot fully ascertain this yet as not all relevant legal documents have been obtained and reviewed. The transactions were entered into by the previous management teams of the bank. If the transactions were illegal, perhaps there may be some recourse.

8. Was the regulator aware of what was going on at the time the transactions were entered into?
There is no information to suggest that the regulator was aware of these transactions at the time that they were entered into.

9. What is the situation with Deloitte?
As of yet Deloitte has not issued any statement. Deloitte’s risk management team attended a meeting with Alliance, but it is unclear at the moment whether they have any records indicating the transactions with the US treasury securities.

10. What about payment of liabilities with an original maturity of less than one year?
It is expected that customer deposits, letters of credit, bills of exchange, etc., will be paid which are necessary to ensure the survival of the bank as a going concern.

11. How will trade syndications be dealt with?
For the Kazakhstan authorities it is important that Alliance be viewed as a going concern. Paying depositors and not paying letters of credit would be problematic. For this reason, Alliance expects to continue to pay short term commitments and restructure medium and long term liabilities. Liquidity support will need to be secured by Alliance. It is understood that Alliance has received assurances that Samruk-Kazyna (“SK”) will provide limited liquidity support to allow Alliance to service critical obligations and payments.

12. What is SK’s position in relation to Alliance and what are the conditions for SK completing the acquisition of Alliance?
Originally, putting the acquisition of Alliance on hold was based on the risk of triggering the change of control provisions in Alliance’s financings and other internal difficulties. We understand that SK’s resources are limited and that it does not want to be in a situation where it does not understand the extent of Alliance’s potential liabilities. It is understood that SK expects to continue its relationship with Alliance. SK is still providing the liquidity support and intends to continue doing so during the standstill period.

13. Is the reputation of the Kazakhstan banking system being considered?
We understand that SK and the Kazakhstan authorities are obviously concerned about this, which is why they would like to resolve the situation very quickly.

14. Was the restatement of the loan portfolio discussed with the FSMA?
The analysis of the loan portfolio has not been discussed with the FSMA. It represents estimates of Alliance’s management based on discussions with the risk management team. Alliance would accordingly like to have a new audit firm involved.

15. Will SK be a party to the restructuring process?
It is Alliance Bank’s expectation that the parties to the restructuring will be Alliance, SK (as a potential investor), the FMSA and the creditors.

16. What assurances can the creditors obtain from SK at this stage?
It is understood that SK intends to continue providing limited liquidity support during the standstill period but we do not have any authority to give assurances on behalf of SK. We understand that interest on Alliance’s debt obligations will be supported. However, SK will not be providing any guarantees as it has limited resources.

17. Are there any conditions to SK continuing to provide liquidity support?
This is subject to negotiations.

18. Will the FMSA be party to the standstill agreement?
No. The standstill agreement will be between Alliance and its creditors.

19. Have any creditors accelerated to date?
There have been no accelerations under Alliance’s bilateral and syndicated facilities.

20. What level of consent to the standstill is being asked of the creditors? 100% consent?
Yes, it is vital that 100% of the creditors agree to the standstill. Having less than 100% would expose the creditors who agreed to the standstill to the risk of free riding. With respect to bondholders, the required level of consent is 51%. There has been little response from bondholders so far. It is in all of the creditors’ interests to be united and show good will with respect to the standstill and restructuring.

Alliance has a very good team who are dedicated to achieving a restructuring and who have had relevant experience in the past (e.g., Alliance’s Chairman M. Kabashev worked in the Kazakh distressed assets fund).

21. If the creditors are given the names of the two financial institutions involved in the transactions with the US treasury securities, they might be able to litigate/arbitrate internationally against the loan counterparties.
The problem with respect to the US treasury securities is that this is no longer just a commercial issue; it may become a broader issue as well. Given that Alliance does not yet have all relevant legal documents/information, it may be too early to commence litigation.

It is understood that the creditors would like to have some form of comfort/representation from Alliance that Alliance is aggressively investigating the transactions related to the US treasury securities.

22. Would it be possible to provide some ballpark figures for the cash-out-option?
It is too early to say at this stage. The figures would depend on the size of the problem and the business plan going forward. They would also depend on the amount of cash available to Alliance to retire the debt and meet regulatory requirements.

23. Isn’t it difficult for the creditors to sign up to the standstill given the uncertainty with Alliance’s financial situation?
Negotiations on the standstill and restructuring are a two-way process and the creditors and Alliance will have to work together. The first step is to negotiate and agree the standstill agreement. This process will take some time, and by the time the standstill is agreed Alliance will hopefully be close to receiving a preliminary report from the auditors providing some of the required financial information to the creditors.

24. How important is Alliance to the banking sector?
Alliance is focused on the retail market. It has one of the widest networks in terms of individual clientele and has the largest network of ATMs in Kazakhstan. Alliance will also be refocusing on SME lending. Other banks in Kazakhstan cover different areas. Personal instant loan (PIL) product line is one of Alliance’s most profitable and riskiest product lines. Whether or not it is viable for Alliance to continue this product line will be considered when the new business plan is developed.

25. Would it be possibly to quantify Alliance’s liability with respect to each class of creditors described in the slide on the priority of payments in Kazakhstan on bankruptcy?
We will ask Alliance to provide this breakdown.