No depositor suffered loss in IBA recovery process – minister (UPDATE)

Business Materials 7 November 2017 16:58 (UTC +04:00)
None of the depositors of the International Bank of Azerbaijan (IBA) suffered losses as a result of the bank’s recovery process.

Details added (first version posted on 13:57)

Baku, Azerbaijan, Nov. 7

By Azad Hasanli – Trend:

None of the depositors of the International Bank of Azerbaijan (IBA) suffered losses as a result of the bank’s recovery process, Azerbaijan’s Finance Minister Samir Sharifov said Nov. 7.

He made the remarks in Baku at a session of five parliamentary committees during discussions on Azerbaijan’s draft state and consolidated budgets for 2018.

“One may think that all state funds are used to cover IBA’s debts to foreign creditors. It is not so,” the minister noted. "The IBA had to fulfill its liabilities to creditors, otherwise the bank’s default would have been declared. Then, the bank’s bankruptcy procedure would start and problems might arise regarding protection of rights of the population and companies that are clients of the IBA.”

“By undertaking the bank’s liabilities, the Azerbaijani government has chosen the only correct way,” the minister said. “This has led to an increase in Azerbaijan’s external debt by $2.4 billion, but [thanks to the measures taken] the situation in the bank is improving today, and I think the IBA can continue its work.”

He added that the Azerbaijani government was able to save $300 million by undertaking the bank’s liabilities.

Sharifov reminded that the Azerbaijani banking sector faced a crisis for the first time in the last 12 years.

“Our neighbors today have the same problems,” he said. “Kazakhstan still cannot cope with the banking crisis that began in 2008, and even Russia’s fourth biggest bank was closed. We cannot say we have solved all the problems of the banking sector, but we are working on them.”

On July 18, 2017, creditors of the IBA adopted a plan of voluntary restructuring of the bank’s foreign liabilities.

As a result of the restructuring, the bank exchanged foreign currency liabilities of about $3.34 billion for new bonds of the bank and the state. Also, all interest on senior and subordinated liabilities that falls due before September 1, 2017 were paid to claimants in cash on the relevant distribution date.

On July 15, 2015, President of Azerbaijan Ilham Aliyev signed a decree on rehabilitation measures related to preparations for privatizing the state-owned shares of the International Bank of Azerbaijan OJSC. In order to restore the bank’s financial position, its distressed assets were transferred to Aqrarkredit CJSC, a state-owned non-bank credit organization. Aqrarkredit CJSC provides the IBA with liquid assets in exchange for distressed assets.

The International Bank of Azerbaijan has been operating since 1992. More than 90 percent of the bank’s shares belong to the Azerbaijani state.