Azerbaijani Central Bank to increase financial support up to half billion for banks

Business Materials 12 June 2009 14:13 (UTC +04:00)

Azerbaijan, Baku, June 12 / Trend N. Ismayilova /

The Central Bank of Azerbaijan reacted at crisis in time and sufficiently, Standard&Poor's international rate agency said.

"Rate of re-financing and reserve requirements on obligations reduced several times that led to entry of liquidity in banking sector in the amount of 350 million manat (3.5 percent of obligations of sector)," the message said.

Moreover, the Central Bank rendered direct support to liquidity of several commercial banks. It gave 50 million manat to small private Unibank in November and $250 million to other commercial banks as short-term loans. Other banks are likely to ask for aid from the Central Bank regarding the strained situation with liquidity in the world. According to the agency, total volume of confirmed financial aid of the Central Bank to banking sector can reach 400 million manat (1 percent of GDP).   

"The Central Bank managed to preserve adequate level of investors' trust in banking sector due to different actions, including use of mechanism of deposit insurance acting from August 2007," the message said.

Insurance provides compensation of deposits in national and foreign currency in the amount of 30,000 manat ($37,000) (maximal amount increased in April 2009, earlier it was 6,000 manat).

Undistributed profit is free of taxation to stimulate re-capitalization of banking sector from January 2009.

On June 12, the official exchange rate is 0.8038 manat to $1.  

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