CBA encourages consolidation in banking sector
Azerbaijan, Baku, Dec 28 /Trend N.Ismayilova/
The Central Bank of Azerbaijan (CBA) promotes initiatives for consolidation in the country's banking sector, the bank told Trend on Wednesday.
"The Central Bank always supports and encourages initiatives to consolidate. However, we believe that this process should be voluntary and based on mutual consent. It is an important condition for ensuring a stable and healthy basis for a new bank," the CBA said.
Currently, the Central Bank is preparing a strategy to consolidate and streamline the banking system. There are 44 banks operating in Azerbaijan.
In practice, the national banking system has a successful practice of consolidation of banks with the European Bank for Reconstruction and Development (EBRD).
UniBank was formed through the merger of two commercial banks - MBank and Promtexbank in 2002, where the EBRD has acquired a 15 per cent stake. There was also a merger of the Bank of Baku with IlkBank in 2005.
The CBA reported on the activation process of the banks consolidation in 2010 and these events have become the basis for major policy directions of monetary and financial stability in 2011.
Banks that do not meet the minimum requirements for CBA capitalisation are a small proportion in the market. The CBA's agenda included the issue of banks merging and the issue of removing the banking system which doesn't come up to scratch, can be considered in the future.
This category of banks may be forced to change ownership to non-bank credit organisations (NBCO) according to non-banking credit organisations law. Banks that do not settle for consolidation for capital enlargement will be proposed to be transformed into an NBCO, the first deputy chairman of the Central Bank Alim Guliyev said.