Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
LONG READ: The oligarch problem
Russia's biggest demonstrations since 2011 in protest against Navalny jailing
Opposition activist Navalny's call for mass protests a success as thousands take to the streets across Russia
Russia's National Welfare Fund accounts for almost 12% of GDP
Police arresting activists ahead of Saturday’s demonstration in support of Navalny
NBU keeps key policy rate at 6%, worsens CPI outlook
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
Albania needs reforms for e-commerce to thrive, says World Bank
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Corona-induced slump in global clothing sector dragged down Albania’s 2020 exports
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Retailers and restaurant owners threaten protests in Bulgaria if reopening is delayed
Bulgaria's Biodit first company to IPO on new BEAM market
Bulgaria’s government considers gradual easing of COVID-related restrictions
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
EBRD investments reach record €11bn in pandemic-struck 2020
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegrins say state administration is most corrupt institution
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romania government to pursue “ambitious” timetable for justice reforms
Private finance mobilised by development banks up 9% to $175bn in 2019
OUTLOOK 2021 Romania
OUTLOOK 2021 Slovenia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
OUTLOOK 2021 Georgia
Iran’s Khamenei menaces private citizen Trump with image of aircraft shadowing blond golfer
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
Download the pdf version
More...
Azerbaijan's central bank on April 27 placed four of the country's top banks under temporary administration with the asphyxiating economic effects of the coronavirus (COVID-19) pandemic clearly being felt by the country’s financial sector.
Temporary administrators have been appointed for Atabank, AGBank, NBCBank and Amrah Bank, each of which are among Azerbaijan’s 15 largest financial institutions. No official explanations were given for the move, but there is speculation on the market that the banks could face closure or could be merged with other lenders. The central bank has also reduced the amount of capital Azerbaijan’s banks have to hold, implying that they were having trouble meeting the old requirements.
The oil price collapse is hitting Azerbaijan hard, just as the previous price crisis in 2014 did. The oil and natural gas sectors make up 45% of its $45bn economy. Last week saw Baku forced, for the first time ever, to tell BP that it would have to cut Caspian Sea oil production to help the country comply with an OPEC+ deal to stem the flow of crude on to decimated markets and lift prices, while Azerbaijan’s sovereign wealth fund—the State Oil Fund of Azerbaijan, or SOFAZ—has lately spent $2bn defending the Azerbaijani manat (AZN).
“Liquidity and financial sustainability problems”
A central bank source told Reuters that “all four banks had been facing liquidity and financial sustainability problems”. Interfax, meanwhile, quoted a source at the regulator as saying: “The order affects deposits totalling 7.3 billion manats [$4.3bn] and protects the interests of 8.3 million people.”
As early as February, the central bank said it had identified “serious financial problems” at Atabank, citing a large number of high-risk loans. AtaBank merged with the Azeri Caspian Development Bank in April 2017. Its capital is 600mn manats ($353mn).
Azerbaijan has a relatively small banking sector, with 30 lenders in all. But the bailout three years ago of its largest bank, the state-run International Bank of Azerbaijan (IBA), cost the state budget billions of dollars. Last October, IBA said it was embarking on a three-year development strategy that would prepare the lender for its delayed privatisation. It also said it planned to set up its own investment company.
Top government officials have recently made upbeat statements, saying that the country would not be forced to devalue the manat, which it did twice in 2015 causing substantial hardship for ordinary Azerbaijanis with manat savings.
In another move to shore up the banking sector, President Ilham Aliyev has signed an order extending the term for which bank deposits are guaranteed by the government.
“I think this is not the end, the process of closing or merging banks will probably continue during the year,” economist Gubad Ibadoglu wrote on his Facebook page, as reported by Eurasianet.
‘Systemic problems’
Ibadoglu added that the current banking crisis was rooted in more systemic problems in the sector, which is controlled by politically well-connected figures in the hydrocarbon-rich country.
“Unfortunately, in 28 years [of independence], a healthy and competitive banking market has not been formed in Azerbaijan, and banking management that meets modern corporate standards has not been established. The costs of all this will be borne primarily by bank customers, who again will be the most affected population. Account funds will not be returned to the owners in full,” Ibadoglu wrote in another post.
“It is not easy to make a forecast in the current uncertainty. Or if the devaluation of the manat takes place in a few months, then who will pay for the devaluation of manat deposits in banks that closed yesterday? How will these types of risks be managed? The Central Bank must also answer these questions.”
Register here to continue reading this article and 5 more for free or purchase 12 months full website access including the bne Magazine for just $250/year.
Register to read the bne monthly magazine for free:
Already registered
Password could contain only a-z0-9\+*?[^]$(){}=!<>|:-_ characters and have 8-20 symbols length.
Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.
Forgotten password?
Email field can't be empty.
No user with this email address.
Access recovery request has expired, or you are using the wrong recovery token. Please, try again.
Access recover request has expired. Please, try again.
To continue viewing our content you need to complete the registration process.
Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.
If you have any questions please contact us at sales@intellinews.com
Sorry, but you have used all your free articles fro this month for bne IntelliNews. Subscribe to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free subscription to bne's digital weekly newspaper to subscribers to the online package.
Click here for more subscription options, including to the print version of our flagship monthly magazine:
More subscription options
Take a trial to our premium daily news service aimed at professional investors that covers the 30 countries of emerging Europe:
Get IntelliNews PRO
For any other enquiries about our products or corporate discounts please contact us at sales@intellinews.com
If you no longer wish to receive our emails, unsubscribe here.
Magazine annual electronic subscription
Magazine annual print subscription
Website & Archive annual subscription
Combined package: web access & magazine print annual subscription