S&P: Decrease in percentage ceiling on insured deposits to affect interest rates on deposits in Azerbaijan
Azerbaijan, Baku, Aug. 24 /Trend A.Akhundov/
Decrease of percentage ceiling on insured deposits in Azerbaijan will lead to a decrease in interest rates on bank deposits, the Primary Credit Analyst of Standard & Poor's Rating Services Viktor Nikolskiy said.
From August 1, Azerbaijan Deposit Insurance Fund (ADIF) is not insuring individuals' deposits invested in country's banking system at a rate of more than 10 percent.
The decision to lower the ceiling on insured deposits from 12 to 10 percent was taken by ADIF board of trustees in July. Alongisde with this, the fund has kept the maximum level of insurance coverage for one contribution unchanged - at 30,000 manats.
This decision will apply only to those deposits, which will be invested after August 1. The current contracts with investors will remain in force until the end of their validity.
"There are banks with large investors, and they will not be affected. But, in whole, this will lead to the fact that some banks will start cutting rates. After the bankruptcy of Royal Bank the population began to believe in this tool," Nikolskiy said.
The license for OJSC Royal Bank's banking activities was liquidated by the Central Bank of Azerbaijan (CBA) on July 12, 2012. The closing of Royal Bank was officially recognized as an insured event on July 16, and a moratorium on performing its obligations before depositors was imposed.
"The process was transparent and operative. For the first time everything went on the highest level," the Primary Credit Analyst of S&P said.
The ADIF started its activity on August 13, 2007. Today, the fund's members include 42 banks operating in 43 countries.
The official exchange rate for Aug. 24 is 0.7844 AZN/USD.