The International Bank of Azerbaijan halted foreign debt payments and is preparing for talks with creditors.

Bloomberg reports that the currency crisis in the Caspian Sea region brought Azerbaijan’s largest bank to the brink of collapse.

The agency informs that the bank failed to make the principal and interest payment on an USD 100m subordinated loan on May 10. Some of the bank’s foreign-currency debts will be exchanged for sovereign in the nearest future, and the procedure of debt restructuring will begin.

Because of those shocks, the price of the bank’s dollar bonds lifted the yield 9.45 percentage points to 14.1%.

“Re-establishing the financial viability of IBA is critical so that the bank can continue to provide important banking services to the Azerbaijan economy,” said Azerbaijani Minister of Finance Samir Sharifov.

According to Bloomberg analysts, Azerbaijani government has so far spent AZN 9.93 billion (around USD 5.9 billion) on buying the bank’s toxic assets and more than USD 1.3 billion on deposit to provide liquidity.

“We are concerned regarding the continuing decline in the financial and capital indicators of the bank. Implementation of IBA’s proposed restructuring plan is an important step not only for the bank, but for the entire banking sector of Azerbaijan.” said Rufat Aslanli, head of the regulator.

Bloomberg believes that the recent rise in oil prices will have positive effect on Azerbaijan’s economy.

“A rebound in oil prices this year has brought little relief for Azerbaijan, the third-biggest crude producer in the former Soviet Union, which fought a run on its currency last year after already suffering two devaluations in 2015,” the agency stressed.