Azernews.Az

By Nigar Abbasova

Azerbaijan Deposit Insurance Fund (ADIF) will attract a two-year loan worth 100 million manats ($ 63.2 million) from the Central Bank (CBA) to pay compensations to depositors of four recently closed banks – Zaminbank, Dekabank, Kredobank, Parabank.

Azad Javadov, Executive Director of ADIF announced about this while talking to reporters on July 29.

“We have already appealed to the CBA in this regard and the credit line will be opened soon. We have attracted a two-year loan, but I think we will finish payment earlier,” said Javadov.

Javadov also noted that currently, ADIF has 26 million manats ($ 16.4 million) while about 20 million manats ($ 12.6 million) falls to a share of correspondent accounts of four closed banks.

“We think that we will receive nearly 15 million manats ($ 9.4 million) on closed banks every month and these funds will be directed to the repayment of the loan taken from the CBA,” he added. “Therefore, we do not plan to attract additional funds from ADIF-member banks.”

He also said that the preliminary volume of compensations for four liquidated banks in Azerbaijan amounts to 110.7 million manats ($ 69.9 million).

ADIF receives about 30 million manats ($ 18.9 million) a year from calendar payments. Thus, funds of ADIF are replenished every year.

ADIF member banks are required to pay quarterly calendar payments in the amount of 0.125 percent (0.5 percent per year) of the total amount of insured bank deposits, in accordance with the legislation.

He said that the overall volume of deposits of individuals in Parabank amounts to 87.617 million manats ($ 55.387 million), while the volume of insured deposits is 61.949 million manats ($ 39.16 million). Deposits worth 43.788 million manats ($ 27.680 million) will be compensated. The number of depositors that have insured deposits in the bank amounts to 18,970 people.

The volume of deposits in Zaminbank is 53.632 million manats ($ 33.903). Deposits of 10,742 individuals worth 53.631 million manats ($ 33.902 million) are insured, while the worth of compensable deposits amounts to 36.35 million manats ($ 22.97 million).

The total volume of deposits in Kredobank is 30.206 million manats ($ 19.094 million) of which 20.956 million manats ($13.247 million) are insured. Some 27.768 million manats ($ 17.553 million) are compensable.

The total volume of deposits made by individuals in Dekabank is 5.585 million manats ($ 3.530 million) while 3.767 million manats ($ 2.381 million) worth deposits belonging to 133 people are insured. Deposits worth 2.807 million manats ($ 1.774 million) are compensable.

Javadov also recalled that the process of paying compensations will start from August, 1, mentioning that the Fund has decided not to resort to the assistance of agent-banks to pay compensations.

“This time, the depositors will be able to get their compensations in the offices and branches of the banks where they have made deposits. We have made this decision because the population has more trust in their banks. The process will go more rapidly and easier this way,” he said.

Commenting on the compensation of uninsured deposits, Javadov said that the banks will be able to return uninsured deposits to the population. He mentioned that the volume of uninsured deposits in the banks amounts to 40 million manats ($ 25.2 million). Financial means of the banks are sufficient to provide payments.

He also underlined that the payment will be implemented once in a month.

The recently adopted law “On full insurance of deposits” envisages that within three years, the public deposits, with the annual interest rate not exceeding the maximum level set by the Council of Trustees of the ADIF should be insured, regardless of the amount of deposits in banks that are fund-members. The compensation of uninsured deposits should be paid according to the “Law on deposit insurance” should the insurance case occur in ADIF member-banks.

The licenses of DekaBank, KredoBank, Parabank and Zaminbank have been cancelled due to their failure to meet necessary requirements specified in the relevant legislation.

The closure of the banks is expected to reduce the risks for the banking sector, as well as strengthen the financial stability, increase the confidence and ensure the development of the financial sector.

ADIF has been appointed a liquidator of four banks on July 21. Temporary administrators were appointed to the banks on July 22.

Since the beginning of 2016, the Central Bank of Azerbaijan has terminated the licenses of the Caucasus Development Bank, Atrabank, Gandja Bank, Bank of Azerbaijan, United Credit Bank and NBCBank. Later, the license of NBCBank was restored due to the bank's plans to merge. The Caucasus Development Bank and AtraBank also have such plans.

Currently, 33 banks have licenses for implementing banking activities in Azerbaijan.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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