Azerbaijan, Baku, July 17 /Trend A.Akhundov/
Fund worth about 22 million manat will be required to pay compensation to depositors of RoyalBank, whose licence was revoked by the Central Bank of Azerbaijan (CBA) last week, executive director of the Azerbaijan Deposit Insurance Fund (ADIF) Azad Javadov told Trend on Tuesday.
"We will get access to the documents of the bank today, so there are no precise figures yet. However, we know that in general about 22 million manat will be required. Approximately 47,000 investors, representing more than 98 per cent of investors of Royal Bank will receive compensation," Javadov said.
Proceeding from the CBA's letter, on July 14 the board of trustees of the Deposit Insurance Fund decided to start preparatory work for paying out compensation and choosing an agent bank. The CBA board of directors made a decision on the revocation of Royal Bank's licence on July 12. According to the decision, a temporary administrator has been appointed in the RoyalBank since July 13. The Central Bank will appeal to the judicial bodies to launch Royalbank's bankruptcy proceedings. According to the law on 'Banks', immediately after the Central Bank makes a statement about the beginning of bankruptcy proceedings, a moratorium on the bank will take effect.
Javadov noted that the fund has accumulated sufficient funds to make payments in a normal manner.
"At present the Fund has 48 million manat. We have already recalled the necessary funds that were invested in such instruments as government bonds and bonds of the Ministry of Finance of Azerbaijan We had 12 million manat liquid, and withdrew additional 10 million, so the required 22 million is already in our possession," Javadov said.
He noted that the structure of the investment fund portfolio changed after the withdrawal of funds invested in securities.
"After the withdrawal, the investment portfolio fell to 26 million manat. Most of the funds placed in government bonds, five million euros transferred to the management of the bank manager Deutche Invest, and two million manat were invested in mortgage bonds," Javadov said.
Since June 1, 2010, the deposits to ADIF member banks at an annual interest rate of over 12 per cent are not insured by the Fund. Currently, the maximum level of insurance coverage for the deposit is 30,000 manat. For the insurance of their deposits, the individuals do not make any payments as insurance payments are made only by banks.
ADIF began operations since August 13, 2007.
Today, 42 banks from 43 operating in the country are members of the bank. One bank is still working with a limited licence, not having access to deposits due to the non-compliance to the requirements of the Central Bank.
A single case of bankruptcy wasn't registered during the time of ADIF operation and accordingly, the payment of the ADIF wasn't implemented. Accordingly, the payment of compensation to Royal Bank will be the first practice of the ADIF.
RoyalBank is a commercial bank operating in Azerbaijan. It has 32 branches in Baku and regions of the country. The bank has Royal Card processing centre.
Royal Bank was established on August 2, 1993 as the joint commercial bank 'OZ Bank'.
Official exchange rate on July 17 is 0.7857 AZN/USD