Cancellation of Bank Licenses Demonstrates Elman Rustamov’s Managerial Weakness - Akram Hasanov

Baku / 13.05.20 / Turan: “It is wrong to close even the worst bank during quarantine. This creates a panic, and investors get together and create a danger of the spread of the virus."

This was stated in an interview for Turan by the banking expert Akram Hasanov.

He noted that nowhere else in the world except Azerbaijan, during the pandemic, several banks were closed.

“Problems should have been solved at the time when they arose. In a short time, the Central Bank canceled the licenses of four banks. However, the situations in each of them are different,” he said.

According to him, while Atabank was definitely a problem bank and could not be saved, then the situation is different with others.

Hasanov noted that the Central Bank is not transparent in this matter and is content with the statement that these banks had many bad loans and their total capital is low.

“If only this is the case, then most banks in Azerbaijan should be closed. After two devaluations in 2015, the loan portfolio of all banks became problematic. However, in reality it all depends on the collateral against which the loan was issued. Even if the bank has a problem loan, but at the same time it issued a loan against the appropriate security, then sooner or later it will be able to repay its money. In this case, the Central Bank must issue a loan to this bank in order to correct the situation,” he said.

Hasanov reminded that 60% of loans issued by the bankrupt Standard Bank were without collateral, and therefore it was impossible to save it.

 “However, I know that there were plenty of collateral for loans issued at AGBank. In other words, the bank could sue the debtors and return the money back through the sale of collateral,” the expert emphasized.

The Chairman of the Central Bank Elman Rustamov said that there were bad loans, but does not talk about the amount of collateral for these loans.

“The Central Bank management is weak. I know that the person exercising banking control in the Central Bank does not know this area at all,” he said.

The expert noted that the Central Bank's managerial weakness shows itself in the fact that instead of saving banks and doing business for recovery, they make the easiest decision, which is canceling the license.

“A lot of work needs to be done to save the bank. And they do not want to trouble themselves,” Hasanov believes.

On the other hand, in his opinion, a closed bank is a tidbit for the liquidator.

“If you give the bank the opportunity to save the situation, then it will fight for itself, put up a deposit for sale, and repay loans. However, the liquidator does not care about this. His business is only the sale of bank property and the proceeds of money for it. Moreover, it is possible that they also get “kickbacks” for this,” he said.

Recall that in late April and early May, the Central Bank revoked the licenses of four banks - Atabank, Amrahbank, NBC, and AGBank. –71B-