CBA eliminates weak banks from market
Azerbaijan, Baku, Dec. 1 / Trend N.Ismayilova /
The Central Bank of Azerbaijan (CBA) has no plans to further reduce the number of banks on the country's banking market, CBA Chairman Elman Rustamov said today, commenting on the bank's decision to close two local banks. The CBA decided to withdraw the licenses of Debutbank and Kovsarbank today.
Rustamov said the CBA has long observed problems in these banks.
"They lost their liquidity and solvency, and their licenses were revoked in accordance with the law," he said.
However, the population will not lose their deposits, Rustamov said. The share of deposits in these banks was small and the CBA is already researching activities in accordance with the law.
"The CBA's policy aims to eliminate weaker banks, creating problems for the entire banking system," he said. "This experience is applied in the United States and Russia, and that is fine. However, the CBA's plans do not include closing other banks."
Rustamov also urged banks to consolidate, as they should have greater business opportunities and corporate governance standards to properly construct their activity.
"Debutbank and Kovsarbank had no opportunity to consolidate or change the status of non-bank credit institutions because these banks have large amounts of debt responsibilities, and only healthy banks that have no commitment problems are able to consolidate," he said.
"The CBA made the decision due to their failure to comply with the minimum total capital and banking law violations," the bank reported. "These banks also do not systematically follow the CBA's instructions."
The licenses issued to Debutbank on Dec. 30, 1994 and to Kovsarbank on Dec. 21, 1992 have been eliminated.
The CBA also appointed temporary bank administrators.
The number of banks in Azerbaijan fell to 45 following the liquidation of the banks' licenses.