Holmes Report 31 Aug 2011 // 11:00PM GMT
In 2009, as the global recession continued to widen its grip, banks across the world attempted to recoup investments to sate their own creditors and government debt obligations. BTA Bank, one of the leading lights in the CIS financial sector faced an impossible acceleration of payments to foreign creditors and was on the brink of collapse. Kazakhstan was in danger of being known not just for Borat but as yet another casualty of the global financial crisis.
Once the bank had defaulted on its debt it was taken over by Kazakh sovereign wealth fund Samrak Kazyna and international Independent Advisors were instructed to spearhead a revolutionary and untested approach to rescuing systemically troubled banks. A restructuring process was set in motion with the aim of reaching a compromise with BTA Banks’ creditors to write off between 60 and 80 percent of the debt owed to them. They would in return receive revolutionary cash, debt and asset recovery instruments. This unprecedented deal would reduce the indebtedness of the bank from $US 16.2 Billion to $US4.4 Billion. This revolutionary approach to rescuing the bank was coupled with an asset recovery process as it pursued former executives through the London courts to recoup an alleged $8 Billion in misappropriated bank assets.
Our challenge was to settle creditor anxiety and convince them and international policy stakeholders that the restructuring of BTA Bank represented best value for all stakeholders involved. We built a dialogue that clearly communicated to the global investment community that taxpayers don’t always have to foot the bill - a creditor ‘bail-in’ works much better than a government ‘bail-out’. Ultimately, our campaign positioned Kazakhstan as the model for how global economies can deal with the disastrous consequences of bust and boom economics.
From a media perception perspective there were two challenges we faced to prove the international relevance of Samruk Kazyna’s non-sovereign guarantee approach – why should they care about what a Kazakhstan bank is up to and what exactly does a debt restructuring process entail? Critically, we also needed to proactively counter-act the prevailing negative opinions disseminated about the restructuring by third party sources involved in the London court case.
How we prepared:
Restructuring banks is a complex subject and in order for us to be able to speak with fluency our priority was to fully immerse ourselves in the multiple areas of financial trading as well as a comprehensive grounding in the economic basis for the global credit crisis.
We also needed to be fully conversant with the intricacies of the UK High Court case over the alleged fraudulent transactions conducted by former management. Working closely with the Independent Advisors to BTA Bank and their legal counsel, Ogilvy PR was primed to provide communications counsel on the civil recovery strategies underway in the UK.
Pro-actively re-assure creditors and stakeholder audiences of the immutability of the restructuring and counteract negative/inaccurate information
Put the situation in Kazakhstan in perspective to give it relevance and resonance – whether that was by demonstrating the severity of the Kazakh economic crisis compared with the UK, or indeed Iceland and Ireland, or by highlighting how the British taxpayer was indirectly impacted by the alleged $8 Billion fraud
Help media gain a greater understanding of the myriad complexities surrounding bank restructuring so they have the knowhow to be able to ask the right questions and tell a story that would interest their readers
Harness landmarks in the restructuring process as well as developments in the high court case and in multi-jurisdictional hearings to create a media buzz. This was to demonstrate the transparency of the bank and to provide reassurance that the dual pronged asset recovery and debt restructuring strategies were progressing as timetabled.
Develop the profiles of the Independent Advisors to the restructuring and asset recovery programmes as key spokespeople and influencers within creditor groupings and broader stakeholder audiences. This provided constant disclosure and transparency of the process and ensure that the media had singular points of enquiry when updates were required
Proactively leveraging international economic convulsions, deals and sovereign debt crises to demonstrate the interdependence of international financial markets and political constituencies with a secondary phase campaign. By this stage, the restructuring had been completed with a 92 per cent creditor endorsement. Significant briefings took place with UK national and international media during the Irish Bailout Crisis, resulting in a change in the attitudes of media commentators on the ultimate success of a culture of bail-out, rather than the burden-sharing, ‘bail-in’ approach which referenced in the Kazakh model.
Ogilvy PR’s multi-channel international communications campaign consisted of:
Maintaining a constantly evolving messaging framework
Closely scrutinising media and online discussion on the restructuring process to refute inaccuracies and counter negative commentary with alternative evidence based perspectives
Broadly engaging with media to educate business and financial journalists on the complexities of BTA Bank's restructuring process and to broker dialogue with BTA advisors
Crafting and distributing press announcements to benchmark milestones in the restructuring process
Profiling Independent Advisors and BTA Bank/Samruk Kazyna executives in key international business and financial publications
Proactively placing commentary from BTA Bank/Samruk Kazyna on international market crises and developments
Securing high profile speaking engagements for Independent Advisors
Proactively pitching news angles (e.g. leveraging the scale of alleged fraud which was the largest fraud according to GDP ever heard by the UK High Court and the second largest civil dispute running just behind the dispute between Roman Abramovich and Boris Berezovsky.
Throughout the restructuring process the end result was always uncertain and with so much at stake, communications played a critical role in shaping the outcome. The evidence is clear that the overwhelming success of our international media programme was instrumental in creating a new emerging consensus in support of the ‘bail-in’ framework and ultimately it was praised at the highest levels for driving a 92 per cent creditor approval of the restructuring process.
We did this through securing extensive international print, trade and wire coverage of the restructuring process with articles endorsing the concept of bail-in burden sharing approaches to systemic sovereign debt crises appearing in titles such as The Guardian, The Banker, New York Times, Bloomberg Business, Reuters, CNBC and The Daily Telegraph. A particular highlight that had huge resonance in international markets was a Gillian Tett (Markets Editor) by-lined article in the Financial Times on lessons to be learnt from Kazakhstan and BTA Bank. Tett’s endorsement of the process represented a significant editorial contribution to the transparency strategy engineered by the Independent Advisors and Ogilvy PR.
In addition, we provided a ‘Kazakh perspective’ on global economic developments, such as the Irish ECB bailout negotiations with an article secured in the Economist advising the ECB, the Irish Government and Brussels that there is an alternative to simply burdening tax-payers with the debt created by indolent fund managers and bankers.
Further validation of the scale of influence the campaign achieved in resonating with international policy makers was demonstrated by invitations to the Independent Advisors to present the restructuring ‘story’ from illustrious institutions such as the Paris Club, The Bank of England, The World Bank, Oxford Said Business School, George Town and Harvard.