Azerbaijan’s largest bank not to be privatized in 2016 (UPDATE)
Details added (first version posted at 12:08)
Baku, Azerbaijan, Aug. 3
The International Bank of Azerbaijan (IBA), Azerbaijan's largest lender by assets, is still being prepared for privatization, Rufat Aslanli, head of the country’s Financial Market Supervisory Body, told Reuters.
"The government has resolved the majority of IBA's problems, but the privatization process takes some time, and privatization this year is not realistic," he said.
On July 15, 2015 the President of Azerbaijan Ilham Aliyev has signed a decree on the measures for rehabilitation related to the preparations for privatizing the state-owned shares of the International Bank of Azerbaijan JSC.
The shortcomings in the management, investment and loan policy of the International Bank of Azerbaijan in recent years, as well as financing of less efficient, risky investment projects worsened the bank's financial state, caused increase in the share of distressed assets and reduced its liquidity, said the decree.
In order to overcome the current situation, restore the bank's financial position and ensure its sustainability, the distressed assets of the bank were transferred to the state-owned Aqrarkredit CJSC non-banking credit organization.
Bonds for three billion manat were issued under the state guarantee to ensure IBA's liquidity instead.
Azerbaijan's banks have largely adapted to the external shocks which led the central bank to float the manat currency and close weak lenders, but privatization of the country's largest bank will not take place this year, Aslanli said.
He added that he also did not expect local banks to issue Eurobonds any time soon, given the high level of their dollarisation, currently at a peak of 80 percent.
"The adjustment of banks to new realities is now over, and we can talk about the beginning of improvements," he said.
The number of banks in Azerbaijan has shrunk to 33 at the start of 2016.
Ten commercial banks have lost their licences so far this year, while IBA and Standard Bank are under rehabilitation.