European Bank Recommends Azerbaijan to Expand Foreign Bank’s Access to Local Market

Business Materials 27 February 2008 12:03 (UTC +04:00)

Azerbaijan, Baku, 26 February / corr Trend I.Khalilova / The European Bank for Reconstruction and Development (EBRD) recommends the Azerbaijani Government to open an access for entrance of foreign companies to the country's banking market, which will enable to increase the competitive capability of the Azerbaijani banks, Erik Bergloff, an EBRD senior economist, stated to a presentation of the bank's report on the transition in 2007. [Though since 2004 the NBA has fully liquidated a limit on foreign capital's entrance to the country's banking sector].

According to Bergloff, there are enough banks in Azerbaijan, whilst some of them occupy dominating position, maintaining the loan rates at high level. However, accession of new banks could increase rivalry at this market and promote rise in rates.

In general, the EBRD stresses the necessity for strengthening reforms in the country's banking sector and improvement of the NBA's supervision functions. In accordance with the EBRD's report, index of bank system reforming was maintained on the level of 2.3 from 2001 to 2007. There are changes in the banking indices (the share of assets belonging to the state bank decreased 58.3% to 51% in the total amount of bank assets, whilst the bank's assets with the foreign capital increased from 4.6% to 6.1%.

"It is notable that the world financial crisis did not touch Azerbaijan," Bergloff said.

At the same time the results of the crisis will affect on conditions of foreign borrowing [high rate will be set for loan], because due to high risk this region of CIS, Central and East Europe are considered as sensible.

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