IBA loses millions because of panic
2017 May 23 ( Tuesday ) 13:30:04
Why does not Interbank and the Chamber of Financial Supervision comment on the situation?
The information vacuum thatcovered the process of restructuring the International Bank of Azerbaijan leads to predictable consequences. The day before, Kazakh television channels issued a statement on the readiness of the State Oil Fund of Azerbaijan to return the long-suffering debt of the "Single Accumulation Fund" of Kazakhstan in the amount of 1.6 billion tenge (about 260 million dollars).
"The International Bank of Azerbaijan is ready to repay the debt of the Unified Accumulative Pension Fund (ENPF) of Kazakhstan in full with the funds of the State Oil Fund and there are no reasons for concern for the people of Kazakhstan. The state will assume external obligations on payment of arrears to foreign creditors, "according to an online broadcast of the first Kazakhstani multimedia news channel of the Atameken Business Channel business with reference to a member of the bar association AkramHasanov.
In an interview with Turan agency Hasanov refuted the report on the readiness of the Azerbaijani side to repay the EPPF debt from the State Oil Fund. According to the banking expert, neither local nor Kazakh mass media had anything similar to them.
- The situation with the restructuring of the debt of the IBA has not changed, our state takes on only the debts to seventeen foreign creditors. Their list is published on the IBA website. By the way, today in London a meeting is planned where foreign creditors will express their attitude, read - consent, to repayment of the bank's debt by the state. The process of signing and compiling the accompanying documentation will take several weeks and after that the Interbank will simply write off 3 billion 337 million dollars - 1 billion dollars of debt to the State Oil Fund and 2 billion 337 million of foreign debt. The state will be accountable to creditors until 2025. But the Kazakh fund's debt will continue to "hang" on the IBA. After the restructuring, the bank will make a profit and for this reason its financial position does not threaten creditors, including the EPPF. There is no danger.
- Indeed, the bank got profit, and today there is no danger for creditors. But, you will agree, that the future destiny of IBA and its obligations on external debt is not known to anyone. This is a matter of concern in Kazakhstan.
- I have repeatedly stressed that the debt of the EPPF must be returned in seven years, in 2024, and what will happen during this time, we do not know and cannot know. In an interview with the Kazakh media, it is necessary to explain that the IBA is saved, and there will be no bankruptcy, since they raise the question in this way: "Are we losing money because of the bankruptcy of the Interbank Bank right now?" I reply that this will not happen, because at the present time the state takes the bank out of default. People from Kazakhstan call me and are interested in the fate of pension money. It is necessary to explain that in the situation with the Interbank Bank, the Azerbaijanis suffered more.
- And again to the question of the source of repayment of a part of the external debt of the IBA. Why do you think that the money will be taken from the State Oil Fund?
- This is my assumption, since, figuratively speaking, the state has several pockets - it is, first of all, a budget that does not include such expenses. Further, the Central Bank with four billion reserves, designed to maintain the exchange rate of the national currency. There is also the Social Insurance Fund, which does not cover the reimbursement of foreign debts. Finally, there is the State Oil Fund - the largest pocket.
-While panic around the EPPF is promoted by the position of complete silence of the IBA and the Chamber of Supervision over financial markets. Why are these structures silent?
- The Interbank and the Chamber of Financial Supervision, which has started all this, are afraid to speak openly. I was repeatedly asked by Kazakh journalists why I comment on the situation, and not they? In Kazakhstan there is an opinion that I am the lawyer of the bank and the Chamber of Financial Supervision (laughs, - Ed.), whereas I have nothing to do with this. Moreover, I criticize the bank and the Chamber for an illiterate approach to restructuring. After all, it was enough to agree with creditors on debt restructuring, and, with each one separately, to avoid unnecessary resonance. For example, a representative of Citibank who is due 750 million dollars is coming to Baku. On the spot is a tripartite agreement between the lender, the IBA and the government on debt restructuring. And so with all creditors, whose debt is subject to restructuring.
Thus, it was possible to avoid a fall in confidence in the IBA, its ratings and financial losses. After all, in the last ten days alone, the losses of the IBA have reached several million because of the panic over bankruptcy that could be avoided.
"Why did they do this?"
- A good question ... It was, really, stupid to take and announce the bankruptcy of a major state bank, to initiate a scandal with all the ensuing consequences. To the question of why Interbank and the Chamber of Oversight did not follow the simple path outlined above. It is possible that we became hostages to the conflict between state bodies, since restructuring involves the transfer of debt to the Ministry of Finance and the State Oil Fund, and the latter could not agree with such a verdict. As a result, these structures face the established fact.
Today, four centers of the local financial system - the Chamber of Financial Supervision, the Ministry of Finance, the Central Bank and the Oil Fund cannot coordinate their actions, conflicts and contradictions are constantly arising between them, resulting in behind-the-scenes games. For example, the Oil Fund lost $1 billion and if it were agreed with it in advance restructuring, the State Oil Fund could offer other options for debt recovery. Including through the CJSC Agrarkredit, to which IBA loans were transferred. Even on the website of Interbank, various versions of debt restructuring in English and Azerbaijani languages were published, which also indicates behind-the-scenes games, the desire to outstrip someone.
These circumstances explain the silence of the IBA and the Chamber of Control over financial markets, since the situation is serious. The actions of the bank and the supervisory structure created many problems, including political ones, following the scandal around the Kazakh EPNF.-0--