National Bank of the Azerbaijan Republic

of August 30, 2002 No. 02-10/316

To all banks of the Azerbaijan Republic

To you the regulations of the transactions made by banks with fixed assets (property)", approved by board decision of National Bank of the Azerbaijan Republic of August 16, 2002 No. 18 and which underwent state registration in the Ministry of Justice of the Azerbaijan Republic on August 30, 2002 for No. 2907 go for management in work ".

In connection with entry into force of these Rules Items 2.5 void. and 2.6. "Rules of capture by banks on balance and estimates by them of property for unpaid debts", approved by board decision of National Bank of the Azerbaijan Republic of May 5, 2001 No. 15 and undergone state registration in the Ministry of Justice of the Azerbaijan Republic of May 22, 2001 for No. 2691.

Approved by Board decision of National Bank of the Azerbaijan Republic of August 16, 2002 the Protocol No. 18

Regulations of the transactions made by banks with fixed assets (property)

1. General provisions

1.1. This document is prepared according to the laws of the Azerbaijan Republic "About National Bank of the Azerbaijan Republic" and "About banks and banking activity in the Azerbaijan Republic" and establishes regulations of the transactions made by banks with fixed assets.

1.2. Main objective of application of these rules is prevention of excessive concentration of means in illiquid assets for preserving bank liquidity, timely ensuring execution by it of the obligations and non-admission of capital losses.

2. Transactions of banks with fixed assets

2.1. Banks have the right to make the following transactions with fixed assets:

2.1.1. buy in need of it for their activities or for the purpose of implementation of financial leasing;

2.1.2. sell in case of their non-use in activities;

2.1.3. transfer according to the procedure, established by the legislation, to property the fixed assets received for complete or partial repayment of debts to bank and pledged by the client or given to bank for debt by the third party.

2.2. In the prudential reports submitted in National Bank of the Azerbaijan Republic (further - NBA) with the control purpose, the fixed assets which are in bank property are grouped in two categories:

a) the fixed assets used in banking;

b) the fixed assets which are not used in banking.

3. The investments in the fixed assets used in banking

3.1. Without preliminary written permission of National Bank of the Azerbaijan Republic any bank cannot put in the fixed assets used in its work, investment on the amount exceeding the size of its paid authorized capital.

3.2. In cases of violation of liquidity rate or adequacy of the capital it is not allowed to perform the investments in fixed assets of bank.

3.3. In case of establishment of the amount of investments, put in the fixed assets used in banking the amounts of the following fixed assets and costs are considered:

3.3.1. the parcels of land used or provided for use by bank and its structural divisions, buildings, constructions, furniture and the equipment, vehicles, etc.;

3.3.2. the capitalized expenses on capital repairs of the fixed asset leased by bank (capital repairs of fixed asset, directly connected with leased fixed asset, turned into its integral component and after lease term of the carried-over bank);

3.3.3. the fixed assets provided for use by bank in the future, transferred to its property or received for the purpose of expansion of banking activity. Such fixed assets shall be used during the term which is not exceeding 1 years.

3.4. In the calculation provided in Item 3.3. these rules, the estimated cost of the object built for own requirement of bank is considered.

3.5. In the calculation provided in Item 3.3. these rules, also the amount of the direct and indirect investments paid or relying the owner or the lessor of the building used by bank is considered. The credits issued by bank on security shares of these companies belong to such investments investment of capital in shares, the bond or similar financial instruments of these companies, and also (in the part which is not exceeding credit amount).

4. The fixed assets which are not used in banking

4.1. Treat the fixed assets which are not used in banking:

4.1.1. the fixed assets which are not provided for use in the banking and taken for partial or complete repayment of debts of the client to bank or according to the procedure established by the legislation, subjected by the debtor or the third party to alienation for benefit of bank for debts;

4.1.2. the fixed assets which were earlier used by bank and its structural divisions;

4.1.3. the fixed assets which are not provided for use by bank and withdrawn because of failure to carry out by the lessee of capital lease obligation;

4.1.4. the fixed assets received for expansion of banking activity, but which were not used in banking more than 1 year.

5. Requirements for the fixed assets which are not used in banking

5.1. The immovable fixed assets which are not used in banking shall be carried out within no more than three years.

5.2. The National Bank can extend the term of sale of the immovable fixed asset which is not used in banking for 1 year in the following cases:

5.2.1. in case of documentary reasons for all measures taken by bank within 3 years for sale of this fixed asset;

5.2.2. in case of reasons for possibility of causing to bank of damage within 3 years from sale of this fixed asset.

All measures taken by bank for sale of such fixed assets shall be completely documented and be under constant control of the Supervisory board and Bank board. The conclusion of the appraiser about assessment of fixed assets, offers, correspondence, announcements and other documents on purchase and sale belong to such documents.

5.3. The current of storage duration of the immovable fixed assets which are not used in banking is estimated:

5.3.1. from the date of transition to bank of the property right to the fixed asset pledged or given to bank by the debtor or the third party;

5.3.2. from end date of moving of bank from the old building in new or the terminations of use by it in the activities of the old building;

5.3.3. from decision date about not use by bank of the fixed asset received for the planned works on expansion;

5.3.4. from the date of return to bank of fixed assets because of failure to carry out by the lessee of capital lease obligation.

5.4. Unlike the immovable fixed assets which are not used in banking, the movable fixed assets which are not used in it shall be sold in 120-day time.

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