Four Azerbaijani banks – Atabank, AGBank, NBCBank, and Amrah Bank – which are among the country's 15 largest financial institutions, were taken into temporary administration by the Central Bank of Azerbaijan (CBA) on April 27.
“The order affects deposits totaling 7.3 billion manats (about $4.3 billion) and protects the interests of 8.3 million people,” a source at CBA told Interfax Azerbaijan News Agency.
“All powers on management of the above banks, including powers of general meetings of shareholders transferred to the temporary administrators” the CBA said in a statement.
A day later, on April 28, the licences of AtaBank and Amrakh Bank were revoked by the CBA due to their severe financial problems.
“Financial standing of the said banks has long begun to deteriorate, in particular Atabank has failed to meet its liabilities on returning deposits of the population for an extended period of time” CBA stated.
CBA also announced that in general, the banking system of the country is sustainable, however, it has repeatedly stated that the system has “trouble spots”. The above two problematic banks account for 2,1% of banking sector assets and 3% of the lending portfolio.
Elman Rustamov, Chairman of the Board of the CBA, in an interview with Azerbaijan Television on April 28 said that the crisis was not connected with the double challenge of the coronavirus outbreak and the global oil market shock, but was instead a legacy of “past problems in the banking sector.”
On April 30, 2020, the Baku Court of Appeal declared Atabank and Amrahbank bankrupt and launched the bankruptcy procedure.
Thus, the total number of banks in Azerbaijan having a license decreased to 28.
"According to the law, the process of returning funds to depositors should begin within three months, but we will try to open access to depositors to their funds at the end of this month, or, at the latest, from June 1," Rustamov, said in Baku at a press-conference on May 1.
Rustamov also commented on the fate of two other banks, the licenses of which were not withdrawn.
As part of the emergency measures, the CBA interim administration is operating in these banks,' Trend News Agency quoted the chairman as saying.
“The banks' activity will be re-evaluated” he added. “But there is no reason for concern as the salaries of employees will be paid. The deposits will be insured and will be returned in the usual manner.”
Some analysts argue that the country’s financial system is coming under increasing pressure from the global collapse in oil prices, as crude oil and natural gas are Azerbaijan’s main sources of income. Azerbaijani oil price decreased on the world markets on Thursday (May 7). The price of a barrel of Azeri Light crude oil fell $0.07 to stand at $29.47,
Meanwhile, the government has extended the quarantine regime amid the pandemic until May 31. Azerbaijan has already allocated 1 billion manat to finance measures to reduce the negative economic impact of the virus.