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40% Increase in Azerbaijan’s Bank Sector Capitalization

Business Materials 8 November 2008 12:55 (UTC +04:00)

Azerbaijan, Baku, 8 November / Trend , corr. N.Ismayilova /In September, capitalization of the banking sector in Azerbaijan increased by 3.8% to 1 October and 41.8% compared to the beginning of the year, a source from the National Bank of Azerbaijan (NBA) reported.

According to NBA, bank's capital exceeded AZN 10mln to 1 October 2008. There were 38 banks at the beginning of the year. Banks' capital increased from 94.6% to 97.8%.

The capital in three banks with the specific gravity of 1.9% is formed from AZN 5mln to AZN 10mln, and one bank (0.3%) paid from AZN 3.5mln to AZN 5mln.

Forty-five banks possessed a license to operate in Azerbaijan in the mentioned period. The number of these banks were reduced after the license of two banks - Pochtbank and Atlantbank, were cancelled. On 9 July, the NBA Management Board canceled the license of these two banks in accordance with the arrangements to reconstruct the banking system in Azerbaijan, as well as to provide financial stability and increase the efficiency of financial mediation.

Currently, seven banks are operating on limited license in the country. For this reason, the banks failed to become members of the Deposit Insurance Fund. [Banks were imposed sanctions due to discrepancy of banks' aggregated capital to the minimum size which makes up AZN 10mln]. Each bank has its individual limit term.

In 2008, National Bank has no plans to raise capital for new bank regulatory requirements, but intends to develop a strategy to further capitalization. In general, banks must adhere to the requirements for capital adequacy in the future that accepted in international practice. NBA's developed a complex of arrengements to protect the domestic financial market from the global crisis may change the requirements for capitalization (asset quality and capital adequacy).

There are operating 24 banks with foreign capital, while there were 21 banks with foreign capital in the early of 2008. The foreign capital of the seven aforesaid banks is formed from 50 to 100%, as well as 50% - in 14 banks and two - foreign banks local branches.

The number of organizations of banks operating overseas is seven, including four offices, two bank daughter banks and one branch. Azerbaijan also has four representative offices of foreign banks.

The correspondent can be contacted at: [email protected]

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