THE DECREE OF THE PRESIDENT OF AZERBAIJAN REPUBLIC
on rehabilitation measures related to the preparation of state-owned shares
of “International Bank of Azerbaijan” Open Joint Stock Company for privatization
The provision of access of entrepreneurs and population to the financial and banking services and the development of the country’s banking system is always in the center of attention in the Republic of Azerbaijan. Important measures have been implemented in deepening reforms in this field during the years of transition to the market economy, increasing the capacity of financial intermediation of credit institutions and strengthening competition, as well as, many works related to the development, capitalization and increasing financial stability of “International Bank of Azerbaijan” OJSC of which controlling stock is state – owned.
According to the financial indicators of “International Bank of Azerbaijan” OJSC, it plays an important role in the implementation of settlements and social payments, provision of wide banking services to the population and giving credits to entrepreneurs as the largest and systemically important bank in the country. A sustainable support was provided for the bank by relevant state authorities for the purposes of the maintenance of financial stability of “International Bank of Azerbaijan” OJSC, uninterrupted execution of obligations and settlements, especially, the prevention of an adverse impact of global financial crisis in 2008 – 2009 on the bank’s financial position, its capital and liquidity has been maintained in the required level and the bank has been a reliable partner for local and foreign creditors.
However, recently, shortcomings in the bank’s management and its investment - credit policy, as well as, financing risky investment projects with lower efficiency have led to the deterioration of bank’s financial condition and an increase in problem assets and liquidity contraction. Therefore, there is a necessity to remove troubled assets from the management of the bank and give to a specialized agency in order to eliminate the situation, restore the financial position of the bank and provide its sustainability.
Guided by the paragraph 32 of the article 109 of the Constitution of the Republic of Azerbaijan, I decide as follows in order to ensure the implementation of measures related to the improvement of the financial position of “International Bank of Azerbaijan” OJSC and preparation of its state – owned shares for the privatization:
1.The Ministry of Finance of the Republic of Azerbaijan and Central Bank of the Republic of Azerbaijan shall determine the troubled assets belonging to “International Bank of Azerbaijan” OJSC within fifteen days and take measures for the removal of those assets from the bank’s balance in return of liquid funds in relevant amount in stages and giving to the management of “Aqrarkredit” Closed Joint Stock Company Non-Banking Credit Organization (hereinafter referred to as – “Aqrarkredit” CJSC).
2.It shall be determined that:
2.1.Financing of purchase and management of the assets mentioned in the part 1 of this Decree by “Aqrarkredit” CJSC shall be provided at the expense of the placement of long term, low interest debentures in the securities markets being issued by “Aqrarkredit” CJSC;
2.2.The required quantity and terms of bonds to be issued by “Aqrarkredit” CJSC is coordinated with the measures for the purchase of assets from “International Bank of Azerbaijan” OJSC and the amount of state guarantee relevant to it is taken into consideration in the amount of the limit of internal borrowing limit of the state budget for each year;
2.3.“Aqrarkredit” CJSC shall fulfill the below mentioned functions while managing the assets purchased in accordance with the part 1 of this Decree:
2.3.1.obtain and implement the rights for principal debts (credits) and interests on the assets to be purchased from “International Bank of Azerbaijan” OJSC, collateral (mortgage) which the loan guarantee and guarantee;
2.3.2take measures specified in the legislation (a claim in court, direct the demand to pledge etc.) for the fulfillment of contractual obligations by borrowers and reimbursement of loans (interests) which are overdue;
2.3.3.in case of demand is directed to pledge (mortgage), implement the management of mortgaged property, give suggestions to refer that property to the state property or organize its sale in open auctions by specialized organizations and ensure the direction of obtained funds to the payment of requirements arising from debt obligations;
2.3.4.realize costs required in relation to the asset management in accordance with the cost estimate approved each year for these purposes at the expense of funds obtained according to the clause 2.1 of this Decree.
3. The Ministry of Finance of the Republic of Azerbaijan shall:
3.1. present its suggestions agreed with the Central Bank of Azerbaijan Republic on the issuance, amount, term and payment terms of bonds to be issued by “Aqrarkredit” CJSC on the basis of state guarantee to the President of the Republic of Azerbaijan within fifteen days;
3.2. Arrange the control over the fulfillment of duties specified in the article 2.3 of this Decree by “Aqrarkredit” CJSC, take measures on coordinating the uses of the property with the development prospects of country’s economy in case of demand for debt on the assets purchased by “Aqrarkredit” CJSC is directed to the mortgaged property in the management of assets together with the Ministry of Economy and Industry of the Republic of Azerbaijan;
3.3. take effective measures for bank’s restructuration in the extent enabled by state – owned shares at “International Bank of Azerbaijan” OJSC, improvement and capitalization of financial position, increasing the efficiency of performance, organization of its management on the basis of modern and cooperative management standards, re – formation of the composition of the Management Board at general meeting, improvement loan, debt and staff policy of the bank, as well as, reimbursement of overdue loans (interests) issued by “International Bank of Azerbaijan” OJSC;
3.4. after the completion of restructuration and improvement measures, develop the action plan on the privatization of state – owned shares in the charter capital of “International Bank of Azerbaijan” OJSC within six months and submit to the President of the Republic of Azerbaijan taking into consideration the opinions of State Committee on Property Issues of Azerbaijan Republic and the Central Bank of the Republic of Azerbaijan;
3.5. investigate the compliance with the requirements of banking and civil legislation during issuing loans by “International Bank of Azerbaijan” OJSC and the use of loans on their appointment by borrowers which are involved from “International Bank of Azerbaijan” OJSC and overdue, as well as, given to the management of “Aqrarkredit” CJSC according to the part 1 of this Decree, take measures together with the law- enforcement agencies for legal assessment of the persons who caused the revealed shortcomings and bringing them to justice.
4. The Central Bank of the Republic of Azerbaijan shall:
4.1. take necessary measures on the purchase and liquidity of bonds issued by “Aqrarkredit” CJSC in accordance with the clause 2.1 of this Decree;
4.2. take part in the implementation of measures for the rehabilitation of “International Bank of Azerbaijan” OJSC before privatization within its powers.
5. The Cabinet of Ministers of the Republic of Azerbaijan:
5.1. Ensure the state guarantee for the bonds issued by “Aqrarkredit” CJSC in accordance with the clauses 2.1 and 2.2 of this Decree;
5.2. resolve other issues arising out of this Decree.
The President of the Republic of Azerbaijan
Baku, July 15, 2015