OREANDA-NEWS. July 09, 2009. JSC Alliance Bank is very pleased to announce that following the meetings that took place in London on 29/30 June and 6/7 July 2009 between Alliance Bank and the Creditors’ Steering Committee, Alliance Bank has entered into a Memorandum of Understanding with the Creditors’ Steering Committee with respect to the restructuring of Alliance Bank’s financial indebtedness (the “Restructuring”). The Creditors’ Steering Committee is comprised of Asian Development Bank, Calyon, Commerzbank Aktiengesellschaft, DEG Deutsche Investitions- und Entwicklungsgesellschaft mbH, ING Asia Private Bank Limited, HSBC Bank plc, JPMorgan Chase Bank, N.A., Sumitomo Mitsui Banking Corporation Europe Limited and Wachovia Bank N.A., reported the press-centre of Alliance Bank.

Pursuant to the indicative terms of the Memorandum of Understanding, financial creditors of Alliance Bank are expected to be offered the following options with equivalent interest rates for other eligible currencies:

Option 1: A fixed offer cash buy-back at a 77.5% haircut. This option will be capped to limit the cash allocation to a maximum of U.S.500 million. The minimum amount of debt expected to be retired by the Bank under this option will be U.S.1.85 billion.

Option 2: An option with a 50% haircut, a seven-year maturity, an interest rate of 5.8% p.a. and principal amortization following a grace period of four years. This option will also provide for Recovery Notes to participate in recoveries from written down amounts, litigation and tax assets in a total amount equal to the debt forgiveness. The Recovery Notes will be capped at the initial notional amount of the forgiven debt and entitled to 50% of any cashflows mentioned above, and will carry a notional capitalisation rate of 4.2% p.a.

Option 3: A no haircut option with a 10-year maturity and principal amortisation following a grace period of seven years. There will be an interest rate of 4.7% p.a. for the first seven years (2.0% p.a. paid in cash and 2.7% p.a. capitalized at the end of year seven). Principal and capitalised amounts will be amortised over three years at an interest rate of Libor + 8 ? % p.a. which may be reduced to Libor + 6 ?% when the Bank reaches and maintains investment grade status.

Option 4: Subordinated debt will be automatically allocated to this option. This subordinated option will be classified as Tier 2 capital and involve no haircut, a 13-year maturity and principal amortisation following a grace period of 10 years. There will be an interest rate of 5.0% p.a. for the first ten years (2.0% p.a. paid in cash and 3.0% p.a. capitalized at the end of year ten). The principal and capitalised amounts will be amortised over three years with a fixed interest rate of 10% p.a.

Option 5: This option contemplates the allocation of 33% preferential shares and common shares issued pursuant to the restructuring to participating creditors under options 2 to 5.

In respect of the conversion into preferential shares, this option contemplates conversion of senior debt at a 75% haircut and conversion of perpetual Eurobonds at a 80% haircut. Preferential shares will carry a 4% p.a. interest.

Participating creditors under options 2 to 5 may also receive an equity component in the form of ordinary shares in Alliance Bank representing 33% of common shares.

The Memorandum of Understanding is non-binding on any financial creditor and the restructuring will be subject to approvals.

The full text of the Memorandum of Understanding will be available on Alliance Bank's website: www.albinvestorrelations.com in a due course.

The Memorandum of Understanding as part of Restructuring and Recapitalization Plan will be submitted by Alliance Bank for approval to the FMSA on 15 July 2009, subject to the completion of a number of conditions precedent being fulfilled by Alliance Bank, including the delivery of certain reports and the delivery of a memorandum of understanding executed by Samruk-Kazyna National Welfare Fund JSC (“SK”) and Alliance Bank (the “SK MOU”). Alliance Bank has no reason to believe that approval by the FMSA will not be forthcoming. The SK MOU will provide that, subject to a number of conditions precedent, on or before the successful completion of the Restructuring, SK will acquire a majority stake in Alliance Bank and recapitalise it in amount sufficient to comply with regulatory requirements subject to results of the Restructuring.

Alliance Bank wishes to thank all of its creditors for the support and understanding that it has received during this difficult time and looks forward to presenting the options to its financial creditors and completing the Restructuring in the coming months.