The Azerbaijan Deposit Insurance Fund has begun to choose an agent bank to pay compensation to depositors of the Azerbaijani Royal Bank.
Royal Bank's licence for banking activity was abolished by the Azerbaijani Central Bank (CBA) last week, the fund said on Monday.
'Proceeding from the CBA's letter, on July 14 the board of trustees of the Deposit Insurance Fund has decided to start preparatory work for paying out compensation and choosing an agent bank', a statement said.
About 98 per cent of Royal Bank depositors have been insured in the deposit insurance fund.
'Contributions of up to 30,000 manat will be compensated to depositors to the sum of 100 per cent', the statement said. 'More information about the date and place of payment of compensation will be given soon'.
The CBA board of directors made a decision on the revocation of Royal Bank's licence on July 12. According to the decision, a temporary administrator has been appointed in Royal Bank since July 13.
"The licence was liquidated because the bank did not comply with the minimum level of requirements and the adequacy of the total capital," the central bank said earlier. "It did not fulfil its obligations to creditors and the written instructions of the Central Bank. It did not operate properly."
The Central Bank will appeal to the judicial bodies to launch Royalbank's bankruptcy proceedings.
According to the law on 'Banks', immediately after the Central Bank makes a statement about the beginning of bankruptcy proceedings, a moratorium on the bank will take effect.
RoyalBank is a commercial bank operating in Azerbaijan. It has 32 branches in Baku and regions of the country. The bank has Royal Card processing centre.
Royal Bank was established on August 2, 1993 as the joint commercial bank 'OZ Bank'.