Expert: Pop-up Facts Demonstrate Central Bank Was Not Going to Heal Troubled Banks

Baku / 07.07.20 / Turan: “The Central Bank interpreted in its own way the decision of the Court of Appeal of April 28 on NBC and AGBank and prematurely sent a letter to the Deposit Insurance Fund about the insured event in these two banks.”

This was said in an interview with Turan by financial expert Akram Hasanov.

It should be noted that the decision to revoke the licenses of the two above-mentioned banks was made on May 12, and a letter about the insured event in these banks was sent to the Deposit Insurance Fund on April 28, that is, 2 weeks before the decision was made.

The expert recalled that on April 27, provisional administrators were appointed to four banks - Atabank, Amrahbank, NBC, and AGBank. The licenses of the first two banks were canceled the next day.

 In his opinion, the facts that are emerging now demonstrate that the Central Bank did not at all try to improve the troubled banks, but for some reason took time and two weeks after that announced the cancellation of the licenses of two more banks.

“The Deposit Insurance Fund operates on the basis of a letter from the Central Bank. Here the Fund does not violate the law. And the regulator of financial markets, which is currently the Central Bank, justifies its letter by a court decision of April 28. However, this decision does not give grounds to declare an insured event in NBC and AGBank, he said.

A. Hasanov noted that according to paragraph 2.1.9 of the Law on Deposit Insurance, an insured event is declared in three cases - cancellation of a license, bankruptcy announcement, court decision on a moratorium on payments on deposits of individuals and legal entities, as well as other bank obligations. At the same time, he stressed that the court decision of April 28 contains an expression of a moratorium on payments on deposits of individuals and legal entities, on other obligations of the bank.

“However, in the court decision of April 28 there is an exception. The decision said that banks should continue to pay salaries to their employees, pay current household expenses, as well as pay salaries of employees in areas affected by the pandemic and make compensations to micro-entrepreneurs as their support from the state during the pandemic. In other words, this exception negates the position of the Central Bank, since in the insured event there are no exceptions. It cannot be that the bank continues to pay one, but suspends the other,” Akram Hasanov said.

He believes that this case once again shows how senior officials cannot correctly apply even those laws that they themselves wrote. –71B-