AKIPRESS.COM - Kazakhstan's central bank will investigate the acquisition by the state-managed pension fund of $250 million worth of bonds in the International Bank of Azerbaijan (IBA) after the lender announced it would not repay some of its debts in full, Reuters reported.

The state-owned bank, Azerbaijan's largest, has suspended payments on some liabilities and is seeking support from creditors to restructure more than $3 billion of debt. The bank ran into problems in 2015 when bad loans built up. Azeri President Ilham Aliyev, on International Monetary Fund advice, ordered its balance sheet be cleaned up and the bank sold off, but no sale has occurred. The government has already taken over $5 billion in bad loans from IBA.

That Kazakh officials are now questioning the prudence of holding IBA liabilities is likely to add to the pressure on the Azeri state to implement the lender's restructuring.

Kazakh central bank head Daniyar Akishev said central bank officials took a decision in October 2014 to acquire, via an offshore company and a closed subscription, IBA's 10-year bonds with a coupon paying 8.25 percent annually.

"Some details related to these bonds purchase are raising questions, so the central bank, after conducting the internal checks, is going to send information on the pension fund's investments into the IBA papers to the related authorities for legal assessment," Akishev said.

Kazakh President Nursultan Nazarbayev has been informed of the situation, the central banker said.

Akishev said that the central bank is taking measures to limit negative consequences from the restructuring and is in talks with IBA.

"Together with the government we will choose the most secure restructuring option, from the risk point of view. However, all three options assume a loss and lost profit," Akishev said.

Net assets of the state pension fund of Kazakhstan, a Central Asian nation of 18 million, were at 6.8 trillion tenge ($22 billion) as of April 1.

Around 9 percent were invested into non-Kazakhstan sovereign debt papers, with some 3 percent of that exposure to non-Kazakh private companies' papers such as bonds.