TODAY.AZ / Business

Azerbaijan’s top bank to take measures to stabilize its financial position

12 May 2017 [15:28] - TODAY.AZ

By Azernews

By Sara Israfilbayova

The International Bank of Azerbaijan (IBA) plans to complete the transfer to the state its distressed assets that remained on the balance sheet of the bank, restructure liabilities and determine the strategy of the activities of affiliated banks.

The plan on the IBA restructuring was coordinated with the Financial Market Supervision Body of Azerbaijan.

The IBA affiliated banks operate in Russia since 2002 and in Georgia since 2007. In the framework of voluntary restructuring of obligations, a certain part of the foreign currency debt, attracted from state and foreign creditors, will be voluntarily transferred to the state.

In July 2015, President Ilham Aliyev signed a decree on the measures for rehabilitation related to the preparations for privatizing the state-owned shares of the IBA.

The shortcomings in the management, investment and loan policy of the IBA, as well as financing of less efficient, risky investment projects worsened the Bank's financial state, caused increase in the share of distressed assets and reduced its liquidity.

The IBA has been working closely with the Ministry of Finance, the Financial Market Supervision Body (FMSB) and the Central Bank of Azerbaijan (CBA) to address issues relating to IBA’s financial position and the sufficiency of its regulatory capital in accordance with the objectives of the Presidential Decree.

The FMSB states that the restructuring plan covers only certain obligations to foreign creditors and the state and does not cover all other obligations of the IBA. To fulfill these obligations, the bank has enough free funds.

The restructuring plan contemplates a restructuring process to be effected through an exchange of IBA’s senior and junior foreign currency obligations for direct sovereign obligations of the Republic of Azerbaijan. Pending the implementation of the planned restructuring process, and to ensure equal treatment of all affected creditors, IBA has suspended payments of principal and interest with respect to all obligations to be included in the operation (other than interest under trade finance facilities).

The process will lead to a meeting of all creditors affected by the restructuring plan. If approved by two-thirds of the affected creditors by value the plan will be accepted and become binding on all of them. 

Before the transfer of debts to the government is completed, the implementation of foreign creditors' foreign currency liabilities (with the exception of payment of interest on transactions for trade financing) is suspended.

The bank has been operating since 1992 and is one of the country's two state banks.


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