Ekrem Hasanov: Thorough work to be done now to improve AGBank - one of Azerbaijan`s most significant banks


April 28, Fineko/abc.az. AGBank is a classic example that this bank is not bankrupt - this bank is just experiencing certain financial problems. There is a bank in the financial system that has more problems than AGBank. But no actions are taken against it."

ABC.AZ was made such a statement by expert Ekrem Hasanov, when he was commenting on the decision of the Central Bank’s Board to appoint temporary administrators at AtaBank, AGBank, NBCBank, and Amrah Bank.

The expert explained the problem appeared at AGBank as follows: "These losses are conditioned with the fact that the Bank has a lot of problem loans. As, unlike other banks, this bank did not give purely consumer loans, but gave business loans, joining the demand of the head of state to provide banks with business loans for economic development. These loans also have quite large collateral. Some entrepreneurs today cannot repay these loans. The Bank also sues them and, in the end, winning the case, gradually returns the loans."

Paying attention to another point, Hasanov noted that AGBank has always been mentioned on the positive side, and has always fulfilled its obligations: "In other words, the bank has some difficulties in financial regulations, because it has problem loans. But the customers were not affected. These problems are constantly being addressed. This is now called the problem of classical liquidity. In other words, this means that the bank cannot repay loans because of customers. The case is "dragging on" in the courts. The bank also cannot win the case and repay the loan, quickly sell the collateral and convert this asset into money. Here, too, it is sometimes forced to create reserves until the loans are repaid. When creating reserves, it is deducted from the capital of this bank, and these standards are violated. But tomorrow, when the loans return, the standards will be restored. All over the world, such banks are lent by the Central Bank, restored standards, fulfilled their obligations in due time, and eventually returned to the Central Bank's credit as well. In other words, this is a normal business situation. I repeat there are banks that are in poor condition, that have good collateral, loans with assets. I believe that after this, significant work will be done to improve AGBank, one of the country's key banks."