Azernews.Az

By Nigar Abbasova

The licenses of four banks have revoked in Azerbaijan due to their failure to meet necessary requirements specified in the relevant legislation.

"The licenses of DekaBank, KredoBank, Parabank and Zaminbank have been cancelled in Azerbaijan," Rufat Aslanli, head of the Board of Directors of the country’s Financial Market Supervisory Body said during a press conference.

The relevant decision was made by the authority on July 21, 2016.

“The licenses of those banks have been revoked, as their assets haven’t been classified in line with the law, they haven’t created adequate reserves and the aggregate capital of these banks doesn’t meet the minimum requirement which stands at 50 million manats ($31.8 million),” Aslanli said .

The decision was taken to avert more serious problems in the financial institutions.

“We are trying to take decisions beforehand so that the problems in certain institutions not to trigger more serious problems in a whole banking sector,” he said.

“In general, they haven’t fulfilled the instructions of the regulator,” he added.

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.

Aslanli underlined that all closed banks are members of the Azerbaijan Deposit Insurance Fund (ADIF), therefore, their customers will be able to get payments for insured deposits.

Currently the total sum of insured deposits of the banks amounts to approximately 140.3 billion manats ($89.4 billion) concentrated on about 40,700 accounts.

Aslanli pointed out that the number of accounts does not coincide with the number of depositors as several accounts may belong to one and the same person.

“Currently we are working on clarifying the point, after that we will consider the issue of payment of compensations to depositors,” he added.

He mentioned that payment of the deposits will start a week after the liquidators are defined.

Aslanli said that the Supervisory Body and the ADIF have already carried out preparatory work to pay deposits.

“The Fund possesses sufficient amount of funds to implement payments. Nevertheless, in case of need the Fund may appeal to CBA and get additional resources,” he said.

Meanwhile, Azad Javadov, Executive Director of ADIF, said that the fund is planning to take out a loan from the CBA to carry out payment of compensations. He added that the funds of ADIF currently amount to 26 million manats ($16.5 million). The Fund is planning to appeal for additional 100 million manats ($ 63.7).

Commenting on the existence of other troubled banks in Azerbaijan, Aslanli said that currently the country has no problem banks except the International Bank of Azerbaijan and Bank Standard. Nevertheless, but closing of these banks is not on the agenda.

Meanwhile, management of Parabank is currently considering the issue of turning into a non-bank credit organization. Highlighting the issue, Aslanli said that the Supervisory body is not against the proposal.

Temporary administrators were appointed to the banks on July 22. As many as 450 persons were employed by the revoked banks.

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.

The reason of a halt is the failure of banks to comply with statutory minimum capital requirements as well as manage their activities in a safe and prudent manner.

Earlier, FMSB reported that it is currently engaged in developing an individual program on strengthening financial stability for every bank of the country taking into account processes that occur in the global and local economy.

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

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