Baku, Azerbaijan, Oct. 21
By Azad Hasanli - Trend:
The shareholders' meeting of the Bank Technique JSC has not yet made a final decision on increasing the capital, the bank told Trend Oct. 20.
The extraordinary meeting of shareholders was held Oct. 16.
The sudden erosion of the bank's capital cushion took place following the one-off foreign-currency revaluation loss of around 25 million manats ($23.8 million) in February 2015, Moody's International Ratings Agency said.
This caused Bank Technique's Tier 1 and total regulatory capital ratios to fall to 5.2 percent and 7.1 percent, respectively as of late March 2015. The bank held an unhedged open short position in foreign currency equaling 14 percent of assets, or 124 percent of equity, just before the 25 percent depreciation of local currency against the US dollar.
Bank Technique needs an equity injection of at least 28 million manats, of which 5 million manats would need to be in the form of Tier 1 equity in order to meet regulatory requirements.
"The bank's shareholders are ready to pay the necessary amount in accordance with their share participation, but they have not yet decided on the injection amount," said the agency.
It was earlier reported that Azerbaijani Bank Technique JSC plans to increase its capital by 40 million manats in order to restore activity.
However, the Bank Technique appealed to the Central Bank of Azerbaijan in order to get a loan on favorable terms in the amount of 20-25 million manats, but the regulator has not taken a decision in this regard. Currently, the central bank's refinancing rate is 3 percent.
At present, the issuance of loans and receipt of deposits of the population have been suspended due to the financial situation of the bank, the bank said, noting that the capitalization will make it possible for it to resume lending. The bank focuses on the return of credits, the issuance deadline of which has expired.
Bank Technique JSC was created in Azerbaijan in 1994 (it was called Rashadbank earlier, and Texnika Bank since 1998). The bank received its present name after rebranding in 2012. The Bank offers a wide range of banking and financial services in Azerbaijan.
The shareholders of Bank Technique include investment company Beaufort Investissements S.A [head office located in Luxembourg] with 78.4421 percent interest, while 21.5579 percent belongs to individuals.
Edited by CN