Information by the Central Bank about revocation of the banking license of “Muğan Bank” OJSC and appointment of a temporary administrator

19-10-2023

19 October 2023, Baku: By the decision of the Management Board of the Central Bank of the Republic of Azerbaijan dated 18 October 2023, the license of “Muğan Bank” OJSC was revoked from 19 October 2023, a  temporary administrator was appointed to the bank and an appeal was filed to the court to liquidate the bank through bankruptcy on the grounds that the amount of the bank’s aggregate capital was below the amount of the minimum aggregate capital established for banks, the adequacy ratio of the bank’s aggregate capital was below 3 percent, and the bank failed to conduct its activities in a reliable and prudent manner in accordance with Articles 16.1.6, 16.1.7, 16.1.9, 16.1.18, 57 and 61.1 of the Law of the Republic of Azerbaijan “On Banks”.

Regarding the appointment of the temporary administrator to the bank by the aforementioned decision of the Management Board of the Central Bank, all the powers related to the management of “Muğan Bank” OJSC, including the powers of the general meeting of shareholders of the bank have been transferred to the temporary administrator.

The specific weight of “Muğan Bank” OJSC in the assets of the country’s banking system is 1.4%, in the loan portfolio – 2%, and in the sector’s liabilities – only 1.3%. The revocation of the banking license of “Muğan Bank” OJSC does not pose a threat to the financial sustainability and financial stability of the banking sector. 

“Muğan Bank” OJSC is a member bank of the Deposit Insurance Fund (the Fund) and the Fund will pay compensations on the insured deposits of the population in this Bank in accordance with legislation. Other liabilities of “Muğan Bank” OJSC will be settled by a court-appointed liquidator in the manner prescribed by law. According to the reports submitted by the bank to the Fund, as of the end of the third quarter of 2023, the insured (reimbursed) deposits of the bank amounted to AZN216.7M. To note, the deposits of 99.9% of the bank’s depositors will be reimbursed.