Azerbaijan to introduce “Baku Approach” for supporting financial sector

The Financial Market Supervisory Authority (FIMSA) of Azerbaijan is completing work on creating the “Baku Approach” concept to support the development of the financial market, FIMSA Executive Director Ibrahim Alishov said at the second Banking Forum in Baku.

Alishov noted that the concept is being developed by analogy of the well-known “Istanbul approach”, which helped Turkey to overcome the banking crisis in the early 2000s.

The “Istanbul approach” was introduced in 2002-2005. As part of this project, 318 companies, including 217 big firms, were able to restructure their credit debts and receive additional financing. As a result, Turkey managed to overcome the economic crisis that began in 2001.

During this period, continued Alishov, FIMSA conducted diagnostics in every bank of the country, checked the quality of their assets and formed a special capitalization program.

“As part of these measures, in total, five banks were closed, which were unable to raise their capital, and Bank Standard was among them. In total, we closed 11 banks during a year. This [economic crisis] affected not only the banking sector, but also other sectors. Thus, we closed six insurance companies, 33 credit unions and one non-bank credit institution,” added FIMSA executive director.

He noted that today there are positive trends in the banking sector.

“It is encouraging that the banks prioritized the issue of cost optimization. Another positive factor is that the number of bank employees increased by 245 people in the third quarter of 2017. After two devaluations, this is the first positive trend associated with the number of employees in this sector,” added Alishov.

Azerbaijani insurers offered to set up labor protection fund

Azerbaijan’s insurance companies must assist in establishing a labor protection fund, the Minister of Labor and Social Protection of Population Salim Muslimov told reporters.

“We believe the insurance companies could establish a labor protection fund with help of a part of their insurance collections, moreover, we prepared relevant drafts on it. The fund’s establishment may resolve the legislation issue in this area,” said the minister.

Muslimov also noted that due to employers’ non-compliance with safety standards, in recent times the number of incidents and accidents in the workplace has increased, which results in compensation payments by insurance companies.

“We have repeatedly warned, asked, told, through media as well, all employers, especially those in the construction sector, about the necessity of compliance with safety standards. Nowadays, there is a worldwide economic crisis, but this does not imply that the financial means allocated for accident prevention can be saved and directed to other areas,” said the minister.

At present, compulsory insurance services against industrial accidents are rendered by three insurance companies - Ateshgah Life, Qala Life and PASHA Life.

Currently, 25 insurance companies operate in Azerbaijan.

Export-import operations in Azerbaijan need more supervision – FIMSA

The measures implemented by the Financial Market Supervisory Authority of Azerbaijan (FIMSA) regarding application of the order of regulation of operations on the import and export of goods, are insufficient, Zaur Hajili, head of the Analytical Department of the Financial Monitoring Service under the FIMSA said.

Hajili said that at the same time, a great number of measures to modernize this legislation have been implemented so far and the FIMSA continues this work.

He reminded that the “Order of regulation of import-export operations” was last updated in February 2016.

The mechanism of supervision over this sphere, including criminal and administrative liability, was improved within the framework of these measures, he noted.

The control itself is carried out on the basis of the mechanism created by the FIMSA and the State Customs Committee of Azerbaijan, he added.