Azernews.Az

By Nigar Abbasova

Azerbaijan Deposit Insurance Fund (ADIF), which performs a role of a liquidator in the closed banks, has appealed to the Central Bank of Azerbaijan (CBA) to get a credit worth 460 million manats ($ 282 million).

The appeal is connected with the insurance event that occurred in Bank Standard, one of the largest private commercial banks operating in Azerbaijan since 1995. The insurance event became the biggest ever occurred in the banking system of Azerbaijan.

The volume of compensations to be paid to the depositors of Bank Standard, which was liquidated, will amount to 460 million ($282 million).

ADIF head Azad Javadov said the total volume of deposits in the bank stands at 603 million manats ($ 370 million), while the volume of insured deposits is 568 million manats ($ 348 million). The number of insured depositors in the bank is 138,000 people.

In May, the FMSB appointed a temporary administrator to the Bank for three months, due to the deterioration of the quality of its assets, as the bank’s liquidity and capital position have significantly weakened. New management of Bank Standard was formed during the extraordinary meeting of its shareholders on August3.

A moratorium was imposed on payments for all deposits, except for social payments. Bank Standard got support from the CBA and a recovery program was worked out for the bank to restore its financial sustainability. The controlling stake of Bank Standard was transferred to Azer Turk Bank for recovery. The measures, however, turned to be insufficient.

Javadov further said that the recently-closed Zaminbank was declared bankrupt, mentioning that the fact will inevitably influence the insurance market of the country, as the bank holds some 24 percent share in the Bashak Inam insurance company.

Meanwhile, ADIF will soon launch return of uninsured deposits to the customers of three liquidated banks in Azerbaijan - Parabank, Dekabank and Caucasus Development Bank. The Financial Market Supervisory Body reported that the payment of compensations to the insured depositors of the banks will soon be completed.

ADIF paid compensations worth some 32.68 million manats ($ 20.07) to the depositors of Parabank as of September 30. Depositors of Dekabank and Caucasus Development Bank received compensations worth 2.77 million manats ($ 1.70) and 1.71 million manats ($ 1.05 million). In tote, the Fund has so far paid compensations worth over 37.15 million ($ 22.82) to the depositors of the three recently-liquidated banks.

Depositors of Caucasus Development Bank receive compensations at the bank’s main office. Payment of compensations to insured depositors of Bank of Azerbaijan has been carried out since January 29, 2016 at branches of Muganbank and Rabitabank, and since September 8 at ADIF’s office. Acceptance of applications from insured depositors of DekaBank and Parabank began on August 1, 2016 and the payment of compensations has been carried out since that day.

The Fund’s insurance reserves are formed from membership, calendar, supplementary, fine fees paid by member banks, proceeds from management of the Fund’s resources, grant money, donations and funds from other sources not prohibited by the law.

National currency-denominated deposits are compensated in the national currency, while foreign exchange-denominated deposits in the deposit currency. If deposits are not USD or Euro-denominated, compensation is calculated and paid in one of these currencies based on cross exchange rates set on the basis of the CBA’s official exchange rates for relevant currencies.

The CBA has withdrawn licenses of six banks operating in the country since early 2016. Moreover, FMSB revoked licenses of four banks after the authority got a right to held supervision over the banking sphere in the country.

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

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