After a steep devaluation of the national currency led to dramatic price hikes, massive layoffs and regionwide protests, another worrisome phenomenon spread in Azerbaijan – suicides by fire.
Since December 2015, there have been more than ten cases of suicide, including self-immolations and hangings. These incidents had common causes – difficult financial conditions, and bank debts.
On December 24, 2015, Elvin Mehdiyev, a 23-year-old Baku resident, attempted to burn himself in front of the Nikoil bank office, located on Pushkin Street 30 in Baku,Euro Asia New’s reported. When Mehdiyev started dousing gasoline all over himself, passers-by came to his rescue.
On February 3, Zarnsihan Alakbarova, a 52-year-old Aghjabadi resident and a teacher at secondary school 14, set herself ablaze by pouring fuel in her house yard. She was immediately taken to the nearby hospital. Alakbarova suffered serious injures and was taken to Republic Burn Center, according to ANS PRESS.
The initial assumption was that Alakbarova attempted to commit suicide because of mounting debts. The case is under investigation by the Aghjabadi Regional Prosecution.
According to Azeri Press Agency, Alakbarova died on February 9.
On January 7, Alik Novruzov, a 63-year-old resident of Neftchala region and the deputy director for economic affairs of Neftchala secondary school #4, burned himself in the boiler room of the school,azadliq.info reported.
According to Neftchala residents, Novruzov had about outstanding loans totalling 7,000 manats to different banks. Because of the financial problems, he was unable to repay the bank loans. As a result, one of these banks filed a lawsuit againt Novruzov.
He was taken to the Central Regional Hospital of Neftchala, where he died on January 7.
According to his daughter, Sevtalan Novruzova, the deputy director was a victim of fraud. In her interview withLiberty Radio of Azerbaijan, she said that a chambermaid of the school where he worked had asked Novruzov to be her loan guarantor.
“He agreed, and got 5000 manats in bank debt from Expressbank. As the borrower’s guarantor, he received an additional 2500 manats. Is my father a minister? I don’t know how the bank could give so much money to him? The bank says they also don’t understand how it could have happened,” Novruzova said.
“When we said that to police, they said that the bank stuff is not their business. They don’t care about it. But after my father’s self-immolation, they started investigating this case. It became clear that they [fraudsters] ran away from the region. If I’m not mistaken, they are in Baku,” Novruzova added.
On February 1, musavat.com reported that banks were instructed by the Central Bank not to call and disturb their customers. They believe that these actions may drive debtors toward suicides. Instead of these calls, it was recommended that they solve these problems through courts.
The sharp currency devaluation affected not only bank customers, but banks themselves. Thus, within a short time, a number of banks saw their licenses revoked for a variety of reasons.
At the end of January, Elman Rustamov, the chairman of Central Bank of Azerbaijan (CBA), warned about risks for banks, Trend News Agency reported.
“The Central Bank of Azerbaijan will continue measures that will strengthen the role of the financial and banking sector in supporting economic growth, and improve access of economic agents to loans,” he said during the board meeting dedicated to the results of 2015.
Immediately after this statement, banks started losing their licences. On February 2, CBA revoked the license of Texnika bank. According to the CBA statement, the license was revoked because the total capital of the bank did not correspond to the CBA minimum requirement of 50 million manats. The total capital sufficiency ratio amounted to three percent (the CBA minimum requirement is 10 percent).
In general, 36 banks have banking activity licenses in Azerbaijan. The CBA has revoked the licenses of seven banks since early 2016, including Bank of Azerbaijan, Gence Bank, United Credit Bank, NBCBank, Atra Bank and Caucasus Development Bank, Texnika bank. All of these banks reportedly could not fulfill their obligations to creditors, according to Trend.az.
Some banks are considering mergers to survive economic hardships. On February 3, AGBank and DemirBank signed a protocol of intent about a possible merger. Trend.az reported that after losing its license, the Caucasus Development Bank plans to merge with Gunay Bank and Atrabank. NBCBank also signed a protocol of intent to merge with Parabank and Kredobank on February 4.
But later the Chairman of the DemirBank’s Supervisory Board, Etibar Aliyev, said that bank had no plans to merge with other banks.
The current economic problems in Azerbaijan started in December 2015, when the Central Bank abandoned its currency peg to the dollar. On December 22, the manat lost 32 percent of its value in one day.
On Jan.29, Standard & Poor’s downgraded Azerbaijan’s credit rating to speculative or “junk.” The credit rating agency forecasted that the Azerbaijani economy would contract in 2016 for the first time in two decades “as exports decline while consumption falls in the wake of sizeable manat devaluation.”
“External risks are increasing, with the central bank’s foreign currency reserves declining by two-thirds from their mid-2014 peak,” S&P stated. “Azerbaijan continues to face a number of domestic political and geopolitical risks. We believe decision-making is highly centralized and lacks transparency, which can reduce policymaking predictability.”