Azerbaijan, Baku, March.05 / Trend N.Ismayilova/
15-20 banks are enough for the economy of Azerbaijan, Alim Guliyev, First Deputy Chairman of the Board of the Central Bank of Azerbaijan (CBA), reported on Friday.
"Currently, there are 46 banks operational in the country, and we believe that this is an extreme number for such country as Azerbaijan. Therefore, one of the principal tasks of the Central Bank in 2010 will be to work out a strategy of consolidation and optimization of the banking system," Guliyev said.
There are currently a lot of banks whose main financial indicators do not form the banking system, he added.
"Therefore, we believe that the number of 15-20 is the most optimal one for Azerbaijan. In this connection, the Central Bank will be optimizing the banking system in 2010, and this process may take longer than a year," Guliyev underscored
According to Guliyev, the Central Bank will begin to pursue a strategy of consolidating banks this year. At the moment, the strategy is being concretized and specified; however, realization of the strategy will take a long period of time.
"Banks will have the following three ways: banks, which do not form the system in terms of their assets and accounts, will have either to unite through a merger of healthy assets into one large bank or be transformed into non-bank credit organizations, while weak banks will be liquidated", Guliyev said.
Nienke Oomes, Chief of the IMF team on Azerbaijan, says the IMF also backs the idea of decrease of the number of banks, something that will strengthen competition among them, ease the observations the CBA conducts, and will help reduce credit interest rates, which remain relatively high.
"Currently, there are 46 banks operational in the country, which, in our opinion, is a rather large number for such economy as Azerbaijan's", Oomes reported earlier this week on her visit to Azerbaijan. She was conducting consultations with the Government over Article IV of the IMF Agreement.