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Financial Market Supervisory Authority Of The Republic Of Azerbaijan

Press releases

30 september 2016, 19:45

"Bank Standard"'s banking license has been revoked

The compensation will be paid on the guaranteed deposits of population

30 September 30, 2016; Baku - Based on the decision of the Board of Directors of the Financial Market Supervisory Authority (FIMSA), dated 30 September 2016, the banking license of the "Bank Standard" CB has been revoked starting 1 October, 2016.

FIMSA's decision has been made at the request of the designated on 4 July 2016 special administrator "Azer-Turk Bank" OJSC and the new management of the "Bank Standard", and in consultation with the state financial institutions (Ministry of Finance and the Central Bank).

As reported, shortcomings in the management of "Bank Standard" CB and in investment and credit policy, including low-yield investment projects, recently led to deterioration of its financial situation, an increase in problem assets, weakening of the bank's liquidity and capital position, difficulties in the implementation of their obligations before the creditors.

In order to regulate the problems in the bank, FIMSA appointed a temporary administrator for a period of 3 months, starting May 3. During the administration of the Authority, as a result of measures on the mobilization of assets and the liquidity support by the Central Bank, payments of the social nature and repayment of the deposits up to 5,000 AZN were provided. In addition, payment of salaries of employees of the bank and its customer organizations was continued uninterrupted.

Taking into account the bank's position in the financial sector, the special weight of assets, the social nature of its liabilities, and the systemic importance, decision has been made in coordination with the fiscal and monetary authorities on its recovery through "Azer-Turk Bank", whose majority of shares are state-owned .

Special administrator reorganized the Supervisory Board and formed the governing bodies of "Bank Standard" and entrusted them with preparation of a special rehabilitation program in order to fully restore financial sustainability of the bank.

Since then, the bank's new management has offered several recovery scenarios, but none of those have not been sufficient to restore financial stability of the bank. During this period, despite the liquidity support by the Central Bank of the Republic of Azerbaijan in order to solve the problem of acute shortage of liquidity faced by the bank, it was impossible fully recover the solvency of the bank and prevent its losses without additional capital injection.

Referring to the impossibility of allocation of investment required for the recovery of the "Bank Standard" by the Government or the Central Bank under the current macroeconomic conditions, the special administrator bank has asked to put immediate stop to the bank's recovery initiative and to declare the bank insolvent.

Taking into the account the appeal and in order to stop additional losses, the Board of Directors of FIMSA decided on 30 September 2016 to revoke the banking license of the "Bank Standard" CB starting 1 October, 2016.

"Bank Standard" is a member of the Azerbaijan Deposit Insurance Fund and population's insured deposits in this bank will be paid by the Fund. To this end, allocation of the funds necessary to pay to the Fund by the Central Bank under the government guarantee is approved by relevant authorities.

Starting today, the temporary administrator has been appointed to the bank by FIMSA. FIMSA will appeal to the court to liquidate the "Bank Standard" through bankruptcy. The bank's liabilities will be settled by the court appointed liquidator according to the law.

Additional information for the media can be requested from press@fmsa.az or received at www.fimsa.az.

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