Tajikistan: Failing Bank Embarks on Fire Sale
One of Tajikistan’s near-insolvent banks has embarked on a desperate fire sale as it tries to scrabble back some much-needed funds to reimburse its long-suffering depositors.
Among the items for sale listed on the Agroinvestbank website on November 25 are cars, trucks, computers, cash registers, bank-note counters, modems, printers and even ATM machines. The cars for sale include a 2016 series Mercedes-Benz S-Class S500, a costly model bought the very same year in which the bank was going down the tubes.
All the items on sale are sourced from Agroinvestbank offices that have been closed as part of the cost-cutting drive required under the terms of a government bailout announced in late 2016. A spokesman for the bank told EurasiaNet.org that the money raised will go toward reimbursing deposit-holders currently unable to access their funds.
Local media reported in October that Agroinvestbank, which is now 87.3 percent government-owned as a result of the bailout program, has laid off three-quarters of its staff and is now employs 524 people.
At the moment, Agroinvestbank is mostly engaged in providing currency exchange, money transfer and safety deposit box services. The bank is also still collecting repayments from debtors and gradually paying out to its customers. Deposit-holders are eligible to withdraw up to 500 somoni ($57) daily on their bank cards.
On November 29, National Bank chairman Jamshed Nurmuhammadzoda told parliament that Agroinvestbank has to date paid out 61 million somoni ($6.9 million) to depositors and still owes another 700 million somoni ($79.5 million). Matters are no better at the country’s other major distressed bank, Tojiksodirotbank, which has paid out 54 million somoni ($6.1 million) and owes 904 million somoni ($102 million).
The Finance Ministry bailout of December 2016 saw Agroinvestbank’s funds topped up to the tune of 1.7 billion somoni ($121.5 million). But industry insiders and disgruntled small-time deposit-holders have said that this money was mainly used to cash out the state institutions that had accounts at the bank.
In essence, this was the mechanism: first, the government printed cash to bail out Agroinvestbank and others, thereby undermining the national currency and further hollowing out the value of people’s savings. In the process, the government in effect took control of those distressed banks and their assets. The disbursed funds were then used to cash out government departments, making the entire operation wholly circular. A simpler alternative could have been to just have the affected state and parastatal depositors swallow their losses, but the adopted solution made it possible to pass the cost onto the public.
Individual private customers have mostly been overlooked for now and have to hope this fire sale will be enough to make them whole.