Liquidation of Bankrupt Banks Opaque - Akram Hasanov

I advise the creditors of bankrupt banks to apply to the Deposit Insurance Fund with demands to show them reports and plans for the liquidation of the banks, the banker Akram Hasanov said. On his Facebook page, the expert noted that even if there is no money in bankrupt banks, you should receive documents on the methods of the owners and administrators of banks managing with the money of clients and bring them to justice.

Hasanov said he received a response from the Financial Markets Supervision Authority (FIMSA) to his request regarding the creation of a general meeting and a committee of creditors on 10 bankrupt banks.

The expert substantiated his proposal by saying there is no real, control structure over the liquidator of bankrupt banks, which is the Deposit Insurance Fund.

"Lenders, such as the owners of insured deposits, entrepreneurs and legal entities whose funds remained in the bank, do not know about the processes occurring in the bankrupt banks and are deprived of the opportunity to participate in the liquidation process," he said.

According to Hasanov, best practices in the world show that the creation of a general meeting of creditors and a committee of creditors is the only way for a proper liquidation process, since they can demand an account on all issues, approve the liquidator's budget, express a distrust to the liquidator, etc.

“In my appeal to FIMSA, I noted that, in the opposite case, there are suspicions of servicing the liquidation process for corrupt interests, and confidence in the banking system is declining,” he said.

The expert said that in its reply, FIMSA informed him there was an appeal to the court to create a creditors' committee for 8 bankrupt banks. At the same time, FIMSA added that in the case of Bank Standard by a court decision, the creation of a creditors committee was entrusted to the Deposit Insurance Fund.

In addition, FIMSA noted that the process of liquidating bankrupt banks is under the control of the court, in close connection with FIMSA. Lenders main complain of violations or corruption.

According to the expert, the response of FIMSA demonstrates that they do not intend to carry out the liquidation process in a transparent environment, or provide a real effective mechanism for the impact of creditors on this process.

“The situation that has arisen has no analogues - creditor committees are created without a general meeting of creditors. In reality, the fund will not be controlled by anybody and it will in turn act with the resources of bankrupt banks at its discretion,” he said.

Recall that earlier in February, the Deposit Insurance Fund issued information that letters to international audit companies were sent to ensure transparency and assess the conformity of the fixed assets of the bankrupt banks to the international standards.

The letters were sent to the international auditing companies Ernst & Young, Grant Thornton, PricewaterhouseCoopers, Moss Adams Azerbaijan, Moore Stephens Azerbaijan, Deloitte & Touche, KPMG Azerbaijan, Baker Tilly Audit Azerbaijan, RSM Azerbaijan, and BDO Azerbaijan.

The international auditing companies Baker Tilly Azerbaijan and RSM Azerbaijan have already responded about their willingness to participate in the process.

With companies ready for cooperation, an agreement on the confidentiality of information will be signed.

At the next stage all information on banks will be transferred to audit companies for the preparation of proposals. After receiving the evaluation proposals in accordance with the rules, audit companies will be selected.

According to the Fund, at present the property of bankrupt banks is valued by local appraisers on the basis of market and liquid value.

The court, after approval of the list of creditors, will approve plans for liquidation, and then a committee of creditors will be established.

After all these procedures, the public will be informed of the exact liquidation plan for each bank, assets and liabilities. Then, in accordance with the sale rules, the sale of property through auctions will be organized. The funds received will be distributed among creditors on the basis of the law On Banks.

It should be noted that the liquidator of nine bankrupt banks (Royal Bank, Bank of Azerbaijan, Tekhnika Bank, Atra Bank, Qafqaz Inkisaf Bank, Bank Standard, Credo Bank, Ganja Bank, Zamin Bank) is the Deposit Insurance Fund.     -----71D