EBRD stands ready to support consolidation of banks in Azerbaijan

Business Materials 16 March 2010 20:26 (UTC +04:00)

Azerbaijan, Baku, March 16 / Trend , N.Ismayilova/

European Bank for Reconstruction and Development (EBRD) is ready to support the process of consolidation in the banking sector of Azerbaijan, EBRD President Tomas Mirov, who is on visit to Baku, said on March 16. "But this will depend on the conditions and forms in which the process of consolidation will occur, and therefore, it requires an individual approach to each bank," said Mirov.

According to him, today the most urgent problems of the banking system of Azerbaijan are the problems with the quality of assets and assessment of the loan portfolio.

"The beginning of the restructuring and consolidation in the banking system may be in this regard the solution of the question," said EBRD President.

The Central Bank of Azerbaijan has already announced the beginning of the preparation of a strategy to consolidate and optimize the banking system. As a result of it, the number of banks is expected to decline to 20 from the current 46 banking organizations. The first deputy chairman of CBA Alim Guliyev said earlier that the banks will have three options: the banks, not systemized in terms of assets and accountings will have to either unite through merger of healthy assets in a single large bank or transform into non-banking credit organizations, and weak banks will be liquidated.

The consolidation of banks is a long process that has began since 1995. Since then, the number of banks in the country has reduced five times. The policy of consolidation of banks is long-term and conservative, and here it is not acceptable to have mandatory use of an administrative resource, the Head of CBA Elman Rustamov said recently.