BANKING AND FINNACE

Banking and Finance

The financial sector of Azerbaijan is predominantly occupied by banks that hold about 95% of the total financial assets. In addition to banks, credit, and micro-finance institutions (including non-bank credit institutions), as well as, insurance companies also operate in the finance industry of Azerbaijan.

The banking and finance industry is controlled and supervised by the Central Bank of Azerbaijan, which, apart from this, also regulates the monetary policy and payments systems of Azerbaijan. The short-lived Financial Markets Supervisory Authority was established as the centralized regulator of financial markets only existing for 3 years from 2016 to 2019. After the dissolution of this centralized regulator, the control and supervisory functions were returned back to the Central Bank of Azerbaijan.

Banking Law in Azerbaijan

Regulation of Financial Markets in Azerbaijan

In addition to the Civil Code, the industry is mainly regulated by the Law on Banks, Law on Non-Bank Credit Organization, Law on the Central Bank of Azerbaijan, Law on Security Markets, Law on Insurance, Law on the Regulation of Currency, Law on Investment Funds, Law on Investment Operations, and regulations primarily stemming from such legislative pieces, which are adopted by the regulators, mainly the Central Bank of Azerbaijan.

Here at CLC, as an experienced banking law firm, we do provide various legal and tax advisory to banking and financial industry participants, including local and international banks, non-bank credit institutions, insurance, and investment companies.

The banking law and financial law services

Our services with regard to the banking and financial industry mainly include:

• Advisory for obtaining banking, non-banking credit organization, investment operations, and insurance license;
• Legal representation while drafting and conclusion of loan agreements, including advisory for securities of loans;
• Merger and acquisitions, restructuring, setting up and dissolution of branches and departments of banks and non-bank credit organizations; 
• Security agreements, registration of securities, including mortgage agreements;  
• Advisory on local requirements regarding promissory note, bill of exchange, stock, bond, bank guarantee, letter of credit, and capital markets overall;
• Due diligence of the counterparties, including local borrowers for the purposes of issuing loans;
• Providing external legal opinions for the loan agreements, loan documentation, and related secure agreement, to mainly foreign and international lenders; 
• Advisory on the regulation of cryptocurrencies and taxation impacts of crypto-currency income;
• Bank-related litigations, including representing clients before liquidated banks. 

Thanks to the support of our bank lawyers experienced in working with Azerbaijani regulators and specializing in the banking and financial law of Azerbaijan, including previous work experience as a leading lawyer of the Central Bank of Azerbaijan and involvement in the drafting of major banking laws/regulations of Azerbaijan, we completed the following main projects:

• Represented shareholders of Atabank while the first and the only acquisition of banks in Azerbaijan (Atabank-CDB Bank acquisition);
• Advised local borrower before UAE based lender company in a multi-million loan agreement;
• Advised local borrower and the related party bout the application and impacts of transfer-pricing regulations on loans;
• Advised a foreign lender fund and provided external legal opinion on the multi-million loan agreement with “FINCA Azerbaijan” Non-Bank Credit Organization;
• Conducted legal due diligence for the purposes of a potential acquisition of a local bank by a large investment group and provided a DD Report which had a significant impact on the final negative decision;
• Provided legal opinion to the Baku branch of the National Bank of Pakistan on the various questions of Azerbaijani banking law;
• Advised BTB Bank on the tax impacts of imported capital assets;
• Advised numerous foreign clients on the licensing criteria for banks and non-bank credit institutions, online banks, the legal status of e-money, and regulation of crypto-currency in Azerbaijan;
• Represented foreign e-payment systems companies before AG Bank in a 10 million EUR dispute resulting from the revocation of the bank’s license.