Azerbaijan’s Insurance Fund to attract loan from Central Bank to pay depositors of closed banks (UPDATE)

Business Materials 22 July 2016 15:38 (UTC +04:00)

Baku, Azerbaijan, July 22

By Azad Hasanli – Trend:

Azerbaijan Deposit Insurance Fund (ADIF) plans to attract a loan from the country’s Central Bank (CBA) to pay compensations to depositors of closed four banks – Zaminbank, Dekabank, Kredobank и Parabank, said ADIF Executive Director Azad Javadov.

The decision on canceling these banks’ licenses was made by the Financial Market Supervisory Body dated July 21, 2016.

Javadov said ADIF has nearly 26 million Azerbaijani manats (1.5724 AZN/USD on July 22) and it plans to receive about 100 million manats from the CBA. However, these funds may be required only if an insured event is announced in those banks, since ADIF makes payments only in case of banks’ bankruptcy.

“We have started preparations in connection with paying compensations to depositors of the closed banks,” said Javadov.

Most likely, the Financial Market Supervisory Authority will appeal to a court today, he noted adding that after ADIF receives the relevant letter from the court, an insured event will be announced at those banks, and after seven days ADIF will start to pay compensations.

ADIF executive director said also that the volume of deposits at those four banks reaches 187 million manats, including 47 million manats of uninsured deposits. About 80 percent of deposits are in foreign currency.

“I would like to note that all these figures are approximate,” added Javadov. “After the announcement of the insured event, we will receive more precise information from the liquidators.”

ADIF operates since August 13, 2007.

Currently, 33 banks have licenses for implementing banking activities in Azerbaijan. Licenses of six banks (AtraBank, Caucasus Development Bank, Bank Technique, Ganja Bank, Bank of Azerbaijan and United Credit Bank) have been cancelled since early 2016.