Entrance to WTO Opens an Access to Increase Capitalization of Azerbaijani Banks: Expert
Azerbaijan, Baku, 14 February / Trend / Azerbaijan's entrance to the World Trade Organization (WTO) is expected to take place in the near future. One of the conditions of its entrance to the WTO should be the opening of the financial and banking market for foreign capital. Already today the banking sector of the Country is significantly open to foreign capital. Stable macroeconomic situations, high revenue and growing investment attraction form a reliable attitude of the potential investors to the banking sector of Azerbaijan. Therefore, many appeals are received for foreign capital to Azerbaijan.
If foreign banks or banks with foreign capital are taken into account, this makes up one-third (up to 30% in separate indicator and nearly 25% of all banking sector). It needs to be mentioned that this indicator has grown in the past three years when the European Bank for Reconstruction and Development (EBRD), German Development Bank KFW, International Financial Corporation purchased shares in the large Azerbaijani banks such as Azerdemiryolbank, UniBank, Azerigazbank and Bank of Baku.
There are no specific limitations for the foreign banks in the Azerbaijan's market. The conditions to join the market is equal for Azerbaijani and foreign banks. The only ban has been imposed on the opening of branches of foreign banks in Azerbaijan.
Entrance to the WTO will provide access for the further increase in capitalization and expansion of the resource base of the Azerbaijani banking system, increase investment into the Country's economy, expansion of the spectrum of the banking products and services, price reduction in the services. In addition, competitiveness will rise, new technologies will be used, the management will improve and transparency will increase in the banking business. It means that the flow of foreign capital will have a positive impact. However, at the same time, the foreign banks will strengthen pressure on the internal market of the financial services. Azerbaijani banks will risk losing foreign capital in the competitive struggle. The western banks will take more beneficial segments of the banking business, gradually moving ahead of the host banks, and will gain an opportunity to dictate the interest policy in the market. It will result in the loss of independent national banking system and decrease in its role to develop the Country's economy. In addition, foreign banks could transform into large mechanism removing the national capital from the Country.
So, reviewing the results of this issue, it is possible to say that while joining the WTO and opening the financial market for the foreign capital, Azerbaijan should take several measures to protect the national banking market.
Layla Abdullayeva, expert of Trend Analytic Center
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