Azerbaijan Deposit Insurance Fund First to Place Funds Abroad

Business Materials 18 November 2008 16:06 (UTC +04:00)

Azerbaijan, Baku, 18 November/ Trend , corr. I.Khalilova /"The Azerbaijani Deposit Insurance Fund (ADIF) launched the placement of funds abroad and fist deposits were invested in the 

U.S. Federal Reserve System (FRS), Azad Javadov, the executive director of the Fund, said.

"The firs placement of funds was carried out after Fund bank-members paid calendar payments of the third quarter," Javadov said.

As for the third quarter, some AZN 918,000, $911,000 and €153,000 were transferred to ADIF. Totally, additional AZN 1,312 was transferred to ADIF within the a quarter. Taken into account one-time dues by banks in the amount of AZN 10,000 during entering the register of the Fund, the total volume of payments made up AZN 8,897.

By ADIF's investment policy, its funds can be placed in high rating securities in foreign countries and A rating financial institutes.

"This is very danger to invest into foreign securities in the current situation, and we do not want to risk. We consider more safety to place funds in Central banks of leading foreign countries and state securities," Javadov said.

For this purpose ADIF prefers to governance funds independently and to place the main share (83%) of funds in state short-term bonds of the Azerbaijan Finance Ministry, which are issued in manats. Due to the necessity of parity, despite of high profitability of state short-term bonds, fund has to governance the funds in foreign currency abroad. If the state short-term bonds benefit rate makes up 9%, then the FRS rate declined to 0.75% due to the global financial crisis.

Now, the main share of investments into the Fund is placed in the national currency, and the volume of banks' calendar dues as for the result of the third quarter is 50% in manats, 40% in USD and 10% - Euro. The indexes, according to Javadov, change to manats favor. However, the ratio of the portfolio will be equalized after the German KfW bank will issue €5mln loans.

Under the legislation, ADIF may collect to 5% of the total bank investments, or AZN 50mln. The portfolio of investments by individuals to the Fund bank-members made up AZN 1,608mln. ADIF increased the deposit portfolio, which is covered by the Fund, by 7.7% - to AZN 1,462bln. This happened as a result of the completion of collection of calendar payments from ADIF 38 members as for the third quarter of 2008. The uncovered investments increased to AZN 268mln and insured through the Fund - to AZN 1,462mln.

The limit of accumulations may also be increased with growth of bank investments. The annual growth of investments is 40-60%.

On 18 November, the official currency rate is 0.8094 AZN/USD.

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