How can these deposit rates be so high?
In the countries we research, a shortage of foreign currency and high demand for international finance results in double digit forex loan rates. These banks aggressively solicit dollar deposits to finance loans for their customers. | Is it economically safe to invest in Azerbaijan?
It is extremely abundant in oil and gas. The petrodollar inflow to its already large foreign reserves ensures foreign debt can be easily repaid. Even at $34 per barrel, Azerbaijan had a 4% GDP growth rate in 2009.
Read all about the Azerbaijan economy. |
Are high yield bonds equivalent to high interest deposits?
Although rates may be similar, there are numerous reasons why high interest deposits are superior to high yield bonds:- Junk bond values are extremely volatile - easily moving by 25% in a day, based on politics, interest rate changes, economic news, etc.
- Highly unlikely that a Government would bailout a high yield corporation issuing a bond . However, governments often bail out high yield deposit institutions, especially if it is one of the largest banks in the country. This is done to stabilize the financial industry.
- High interest deposits are a technically superior investment than bonds with the same yields.
- Bond funds often produce a negative return for a year.
- No bond fund consistently outperforms its benchmark. In fact, bond funds invariably under-perform due to the fund's costs.
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Costs to open an account?
Generally, we do not levy any fee nor do the investments we promote levy any establishment cost. For International Bank of Azerbaijan deposits, we charge you directly, a one-off fee of 1% of the deposited amount. There is no fee associated with the alternate investments because the provider does pay us a commission.
How is the money deposited?
We assist you to communicate with the bank to open your account. Once the account has been opened, you transfer funds directly to your account with the bank offering the deposit. We never have access to your money. The interest is remitted by the bank according to your instructions. Access to interest may also be availed through a debit card issued by the bank. Prior to maturity, you instruct the bank to either return the principal or extend a new term deposit. |
How do I access the interest?
Via an ATM with a bank issued Master and Visa debit card, or instructions for wire transfer. Generally banks will require an original signed instruction for each transfer, but will accept 12 predated signed letters from you. Transfer can be to any account in the world held in your name.
| Difference between Deposit and a Certificate of Deposit?
With deposits, you can get interest paid regularly during the term of the investment. With Certificates of Deposit you get interest paid only at end of term.
What happens when the deposit matures?
Instruct bank one month before maturity if you want to extend the deposit, or instruct wire transfer of return of funds.
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How can I access my capital early?
The bank issues a credit card (not debit card) with a credit limit of most of the principal. You can also instruct the bank to remit back all or some of the principle by wire transfer. However any capital accessed early, results in a forfeiture of all interest paid to date on that portion of principal. | Why should our services be utilised?
Every bank we approached had not previously opened accounts for foreign non residents. We have negotiated with the banks to route all deposits through bank staff trained to deal with foreigners, i.e. laws regarding foreign identity, withholding tax. We visit banks regularly and can handle problems you may encounter. Hopefully you agree that the reasonable one-off 1.0% charge, which is on average only one-months interest is well worth the extra interest you will obtain. All other money managers charge fees for as long as the money is invested.
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Is it politically safe to invest in Azerbaijan?
The world's largest Western oil companies have no hesitation to invest in Azerbaijan. It is extremely foreign investor friendly to both the West and Russia. It has the highest grading for political risk in the Caucasus. The political problems of its neighbours i.e. Ukraine, Georgia does not affect it.
| What is minimum to open deposit?
We do not have a minimum amount to help open an account. However the bank, due to the administration imposed on a bank to open a foreigner's bank account without client traveling to the bank in person, is generally equivalent of US$ 100,000. The tax-liens deposit minimum is US$ 5,000. |
Are these deposits insured against bank default?
Azerbaijan has a AZN 30,000 (Approx USD 37,000) Insurance Protection Scheme per account. It is generally accepted that the state of Azerbaijan would stand guarantee for all of the debt of the International Bank of Azerbaijan as it has controlling interest, and is the states National Development bank. Azerbaijan has over USD 13 billion foreign reserves and the country's total foreign debt is USD 4 billion.
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Are any of these high rates a hoax?
We encourage your own due diligence on our recommended deposits. A web search on the banks we recommend results in millions of results, without a single derogatory, suspicious or negative comment, which should appease even the most ardent skeptic.
| Deposit Investment Strategies.
There are various strategies to consider when placing fixed term deposits. |
Technical measures.
Here are some technical investment measures of deposit performance for professional investors.
Why are interest rates higher than emerging market bonds?
Emerging market bonds are almost always issued by a Sovereign because corporations would not have the credit ratings to issue a bond. As bank deposits are equivalent to corporate debt, interest rate is usually higher than the Sovereign. Also banks utilise deposits to loan out at even higher rates. | Can corporations open accounts?
I highly discourage the opening accounts in the name of legal entities or trust arrangements, because :-- Banks would prefer institutions buy their much lower interest rates bonds
- Banks will be more prone for a signatory or proxy to visit the bank in person to open account
- Tax relief which automatically available to foreign individuals, is a more rigorous procedure for legal entities.
- Opening documentation required is much more onerous
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