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PRESIDENTIAL DECREE OF THE AZERBAIJAN REPUBLIC

of July 15, 2015 No. 570

About improvement measures in connection with preparation for privatization of the stocks of International Bank of Azerbaijan Open joint stock company owned by the state

(as amended of the Presidential decree of the Azerbaijan Republic of 16.10.2016 No. 1023)

In the Azerbaijan Republic ensuring access to financial banking services of the population and entrepreneurs and development of bank system of the country steadily is in the center of attention. During transition to market economy important actions for deepening of reforms in this sphere, to increase in capacity of credit institutions on financial intermediation and strengthening of the competition were performed, including the large volume of the works aimed at the development, capitalization and strengthening of financial stability of joint stock company "International bank of Azerbaijan which controlling stock the state owns was done.

JSC International Bank of Azerbaijan, being large bank of the country of system value on the financial performance, plays significant role in implementation of calculations and social payments, rendering banking services to the population of wide range, issue to entrepreneurs of the credits. For the purpose of preserving financial stability of JSC International Bank of Azerbaijan, continuous accomplishment of obligations and calculations, in particular elimination of negative impact on financial position of bank of global financial crisis of 2008-2009 the relevant state bodies gave to bank continued support, liquidity and the capital of bank were kept at the required level, the bank remained the reliable partner for local and foreign creditors.

However, the defects allowed in recent years in management and investment credit policy of bank including financing of ineffective risk investment projects, became the reason of deterioration in financial position of bank, growth of share of troubled assets and narrowings of liquidity. With respect thereto for elimination of the current situation, recovery of financial position and ensuring stability of bank, need for transfer of troubled assets of bank to specialized structure appeared.

Being guided by Item 32 of article 109 of the Constitution of the Azerbaijan Republic, for the purpose of ensuring implementation of measures of the stocks of JSC International Bank of Azerbaijan owned by the state connected with financial improvement and preparation for privatization I decide:

1. To the Ministry of Finance of the Azerbaijan Republic and the Central bank of the Azerbaijan Republic within fifteen days to determine troubled assets of JSC International Bank of Azerbaijan, and step by step to exclude from balance of bank these assets in the corresponding amount in exchange for liquid means, and then to transfer to their non-bank credit institution belonging to the state Agrarcredit Private company (further - Agrarcredit Ltd).

2. Determine that:

2.1. financing of expenses on acquisition and management from Agrarcredit Ltd will be performed by the assets provided in part of 1 this Decree due to issue and placement in the security market from Agrarcredit Ltd of the long-term debt bonds provided with the state guarantee and with low interest rate;

2.2. the required amount and terms of the bonds which are subject to issue from Agrarcredit Ltd are compared with measures for acquisition of assets at JSC International Bank of Azerbaijan and the amount of the state guarantee corresponding to it is considered in the amount of limit of internal crediting of the government budget;

2.3. In case of asset management, acquired according to part of 1 this Decree of Agrarcredit Ltd carries out the following tasks:

2.3.1. obtaining and implementation of right to claim on principal debts (credits) and percent, pledge (mortgage) and guarantees the being debt collateral on assets which will be acquired at JSC International Bank of Azerbaijan;

2.3.2. right of implementation of actions for return of unsettled credit debts (percent) and to execution by debtors of the contractual commitments stipulated by the legislation (submission of legal claims, direction of the requirement of pledge, etc.);

2.3.3. if the requirement for credit debt is redirected on pledge (mortgage), to exercise control of mortgage (mortgage) property, to enter offers on inclusion of this property in the list of state-owned property or to organize sale by its specialized organizations through open auctions and to provide the direction of the received funds for satisfaction of the requirements following from debt obligations;

2.3.4. perform the expenses necessary in connection with asset management at the expense of the means received according to Item 2.1 of this Decree, according to expense budget, annually approved for these purposes.

3. To the Ministry of Finance of the Azerbaijan Republic:

3.1. within fifteen days to prepare the offers approved with the Central Bank of the Azerbaijan Republic concerning release, amount, term and payment terms on bonds which will be emitted by Agrarcredit Ltd and to provide them to the President of the Azerbaijan Republic;

3.2. organize control over accomplishment from Agrarcredit Ltd of obligations, stipulated in Item 2.3. this Decree to undertake together with the Ministry of Economics of the Azerbaijan Republic actions for ratio of the directions of use of property with priorities of development of national economy if in case of asset management, acquired by Agrarcredit Ltd, debt obligations on these assets will be directed to pledged property;

3.3. within chance which are given by the stocks of JSC International Bank of Azerbaijan owned by the state, to perform effective measures on restructuring, improvement of financial position, capitalization, increase in overall performance of bank, organization of management of bank on the basis of modern standards of corporate management, to forming of new board of bank on general meetings, to enhancement of credit, debt and personnel policy of bank, and also on ensuring return of overdue loans (percent) issued to JSC International Bank of Azerbaijan;

3.4. after completion of actions for restructuring and improvement, taking into account the conclusions of the State committee of the Azerbaijan Republic concerning property and the Central bank of the Azerbaijan Republic, within six months to prepare and provide to the President of the Azerbaijan Republic the actions plan on privatization of the stocks owned by the state in the authorized capital of JSC International Bank of Azerbaijan;

3.5. study questions of target use by borrowers of the borrowing facilities taken from JSC International Bank of Azerbaijan, including transferred to the control in Agrocredit Ltd according to part of 1 this Decree, observance of requirements of the bank and civil law in case of issuance of credits from JSC International Bank of Azerbaijan, to give legal treatment to the actions of persons which allowed the revealed defects and together with law enforcement agencies to perform actions for attraction them to responsibility.

4. Charge to the Central bank of the Azerbaijan Republic:

4.1. according to Item 2.1. this Decree to take necessary measures for acquisition and bond liquidity which issue is carried out by Agrarcredit Ltd;

4.2. participate within the powers in actions for preprivatization improvement of JSC International Bank of Azerbaijan.

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