Azerbaijan, Baku, Oct. 17 /Trend, I.Khalilova, N.Ismayilova/
Baku Interbank Currency Exchange (BBVB) discussed with the commercial banks of Azerbaijan the possibility of increasing the duration and amount of inter-bank loans, traded at the guaranteed money market (GMM), Farhad Amirbayov, the head of BBVB, said.
"During the discussions it became clear that there are not big problems in the development of this segment, and those that have been discussed can be solved by the market participants," he said.
He said that the problems existing in the market include the large spreads between the demand and supply, and they are formed by the banks themselves, so it was agreed to reduce spreads. These discussions have led to intensification in inter-bank market.
"The banks have interest in this tool because the profitability on this market is much higher than for state securities, but less than rates on loans issued on the open market. The risks are higher there. The transactions start at 8-10 percent per annum, Amirbayov said.
The term of issuing interbank loans is 30 days on GMM today. The banks suggest increasing it from 3 to 12 months.
"Ordinary interbank loans do not exceed this limit. In fact, the banks are ready to increase risk, but get more profit. The tendency to a greater risk is a positive factor. It deals with the fact that the banks generally assess the situation on the interbank market as positive," he said.
He said that the possibility of increasing the amount of interbank loans is also considered with commercial banks. At present, the maximum amount of drawing is 1 million manat. It is proposed to increase up to 3 million manat.
"We conduct poll among market makers now. These proposals will be presented to the Central Bank of Azerbaijan. A year passed when this segment of the market was introduced. Perhaps, it is time to expand opportunities for it to develop," he said.
Representatives of the banks-market makers, including Demirbank, AGBank, Nikoil, Bank Standard, Pashabank, Unibank, AtaBank, Bank Respublika, Bank of Baku, Turan Bank and AFB Bank, met at the BBVB on Sept.17. The Central Bank of Azerbaijan (CBA) also was represented at the meeting. The meeting was aimed to discuss the further development of the interbank credit market and a new segment - GMM.
The Azerbaijani Central Bank, BBVB and a number of market makers (DemirBank, AGBank, Nikoil, Bank Standard, Pashabank, Unibank and Bank of Baku) signed the agreement on October 21, 2009. Turan Bank and AFB Bank joined the project later.
The number of the GMM participants is nine banks.
The GMM is a segment of the OILM. GMM is a new segment of the money market on the organized interbank loan market, which functions on the basis of an agreement signed Oct. 21 between the CBA, BBVB and DemirBank, AGBank, Nikoil, Bank Standard, Pashabank, Unibank and Bank of Baku. CBA is the guarantor of the obligation implementation on the money market segment. Demands on proposals were filed from one to 30 days.