Weekly economic review (Dec. 25-29)
Azerbaijani Demirbank declared bankrupt
The Baku Court of Appeal officially decided to declare Azerbaijani Demirbank bankrupt, said in the message of the Azerbaijan Deposit Insurance Fund (ADIF). In addition, it is noted that the Fund was appointed liquidator of Demirbank.
DemirBank’s license was revoked Dec. 23, 2017.
The Financial Market Supervisory Authority (FIMSA) of Azerbaijan said that the license was liquidated due to the discrepancy between the total capital of the bank and the minimum requirement established for banks, and the adequacy ratio of the aggregate capital is lower than three percent stipulated by the legislation.
The bank also lacks the capacity to fulfill its obligations to creditors.
DemirBank is a member of ADIF, and accordingly, deposits of the population in this bank will be returned by the Fund.
Azerbaijan sets main directions of preferential lending in 2018
Development of small business will be the main direction of preferential lending by the National Fund for Entrepreneurship Support (NFES) of Azerbaijan, the Economy Ministry said in a message. Next year it is also planned to pay attention to the creation of agricultural parks, cattle breeding and greenhouse complexes, large horticultural farms, logistics centers, and meat processing points.
In addition, creation of facilities for production of bread and building materials and for processing of fruit and vegetable products is also among the priorities of the NFES.
The NFES provided preferential loans worth 146 million manats to businessmen in the country in 2017. The loans were granted to about 1,953 business entities for implementation of investment projects at a total cost of 635.6 million manats.
A major part (65 percent) of the allocated loans accounted for Azerbaijan’s districts, and the remaining 35 percent accounted for Baku. About 67.6 percent of the preferential loans were allocated for development of agriculture and 32.4 percent of the preferential loans were allocated for development of manufacture and processing of various industrial products.
Millions of manats attracted from stock market to finance mortgages in Azerbaijan
CJSC Azerbaijan Mortgage and Credit Guarantee Fund attracted 265 million manats thanks to issuance of bonds in 2017, the Fund said in a message.
The message says that since the beginning of the year, the Fund has paid 65 million manats on its principal debt.
In total, the Fund has carried out 13 bond issuances and raised 655 million manats since May 2009.
These funds are intended to finance regular mortgage.
Currently, the Fund’s bonds worth 534.6 million manats are in circulation.
Moreover, 366 million manats were allocated from the state budget for the Fund in 2005-2017.
CJSC Azerbaijan Mortgage and Credit Guarantee Fund was established on December 25, 2017 by merger of the Azerbaijan Mortgage Fund and the Credit Guarantee Fund.
Azerbaijan to establish institute of financial ombudsman
Obligations of the Azerbaijani bank ombudsman will be increased in 2018, Elchin Hasanov, executive secretary of the bank ombudsman, said in an interview to the newspaper of the Azerbaijan Banks Association. He said the work is underway to rename the bank ombudsman and establish the institute of financial ombudsman.
"The work is also underway to adopt legislation regulating the activity of the institute of financial ombudsman,” he said. “The adoption of this law will allow the population to resolve disagreements that arise not only with banks, but also with insurance companies and other participants of the financial market without appealing to judicial instances. A bill has been already prepared and it is being discussed.”
Hasanov also stressed that in the future the bank ombudsman will consider financial disputes worth over $2,000. "Presently, the ombudsman considers financial disputes worth up to $2,000,” Hasanov said. “The reason is that the initial goal was to solve the problems of low-income layers of the population."
Hasanov said that since the beginning of the activity of the bank ombudsman, 163 appeals have been submitted for consideration.
The bank ombudsman in Azerbaijan launched activity in September 2017.
Twenty-three banks and one non-bank organization have signed agreements with the bank ombudsman of Azerbaijan.
The bank ombudsman in Azerbaijan is Ikram Karimov.
Azerbaijani banks may get new concessions on liability restructuring
The period, during which banks can carry out voluntary restructuring of their liabilities, may be extended in Azerbaijan.
The relevant amendments to the “Law on Banks” are envisaged by a new draft law that is being discussed by the Azerbaijani parliament.
Currently, the period of voluntary restructuring of liabilities is 180 days for banks.
However, they could extend the period by additional 90 days with the permission of financial regulator [Financial Market Supervisory Authority].
The new amendments suggest extending this additional period from 90 to 180 days. At the same time, the number of requests for extending the restructuring may be unlimited.
If the draft law is adopted, the amendments will also affect those restructuring processes that began before the adoption of the amendments.