28 April 2020, Baku: As reported, temporary administrators were appointed to the ‘Atabank’ OJSC, ‘AGBank’ OJSC, the ‘NBCBank’ OJSC and the ‘Amrahbank’ OJSC by resolutions of the Management Board of the Central Bank of the Republic of Azerbaijan dated 27 April 2020, all powers on management of the above banks, including powers of general meetings of shareholders transferred to the temporary administrators.

Under the decision of the Management Board of the Central Bank of 28 April 2020 the licenses of the two of the said banks – the ‘Atabank’ OJSC and the ‘Amrah Bank’ OJSC were revoked on that day.

Financial standing of the said banks has long begun to deteriorate, in particular the ‘Atabank’ OJSC has failed to meet its liabilities on returning deposits of the population for an extended period of time. After the Financial Markets Supervisory Authority had been liquidated and its powers passed to the Central Bank under Decree # 1616 of the President of the Republic of Azerbaijan dated 28 November 2019, inspections conducted at both banks by the Central Bank revealed that they had incurred serious financial losses, lost their capital and gone bankrupt. Although banks’ shareholders were informed on findings of the examinations during discussions and offered to inject additional capital, they failed to use this opportunity.

Note that, the Central Bank of Azerbaijan has announced that in general, the banking system is sustainable, however, it has repeatedly stated that the system has ‘trouble spots’. The above two problem banks account for 2,1% of banking sector assets and 3% of the lending portfolio.

Taking into consideration the fact that the situation with commercial banks, that have financial resilience problems, challenges financial stability and needs to be resolved in coordination with related public authorities and the Azerbaijan Deposit Insurance Fund (ADIF), detailed discussions were held at the Financial Stability Board and the Central Bank considered recommendations of the Board in its decisions.

In light of the above, as the size of required capital of the banks fell below the minimum amount set for banks, as well as they failed to maintain reliable and prudential operation, the licenses of the ‘Atabank’ OJSC and the ‘Amrah Bank’ OJSC were revoked by the Manahgement Board of the Central Bank from 28 April 2020 onward and the Bank applied to court to liquidate both banks through bankruptcy.

We want to state that the ‘Atabank’ OJSC and the ‘Amrah Bank’ OJSC are the members of the ADIF and the Fund will fully cover protected deposits of the population in these banks without attracting any public funds. In the event the Fund has not enough funds, the Central Bank will allocate a credit on shortfall according to the legislation. The Fund will repay this loan out of funds generated from realization of the assets of closed banks and calendar fees paid by operating banks. Deposits will be paid in a transparent manner in line with existing procedures and depositors will be kept informed periodically.

Other liabilities of the ‘Atabank’ OJSC and the ‘Amrah Bank’ OJSC will be regulated by the liquidator to be appointed by court under the legislation.

Actions specified in the legislation are under way in other two banks where temporary administrators have been appointed – the ‘AGBank’ OJSC and the ‘NBCBank’ OJSC.

The Central Bank announces that recovery of the rights of the population to use their deposits as a result of banking system remediation, and removal of problem banks from the system together with other steps taken will further boost confidence in the banking sector.

The Central Bank has developed a dedicated actions plan to implement the above processes under the procedures and terms specified in the legislation and will keep infomed depositors and the broad public on its implementation.