Central Bank of Azerbaijan ready to support local banks

Business Materials 9 May 2012 09:05 (UTC +04:00)

Azerbaijan, Baku, May 9 / Trend, A.Akhundov /

If necessary, the Central Bank of Azerbaijan (CBA) is ready to provide financial support to local banks through issuing subordinated loans, CBA Board Chairman Elman Rustamov told Trend yesterday.

The first such loan in the history of the Azerbaijani banking sector has been issued by the Central Bank to the International Bank of Azerbaijan (IBA) in February 2012. A loan worth $150 million manat was issued for five years to increase the level of the bank's liquidity level and capitalization.

"The Central Bank as part of its mandate is responsible for the stability of banks. If such situation arises, we can provide such assistance to banks within the law if necessary," Rustamov said.

In February 2012 capitalization of the banking sector of Azerbaijan increased by 0.44 percent, while compared to February 2011 by 12.7 percent, amounting to 2.467.7 billion manat as of March 1.

According to the CBA, the number of banks with capital exceeding 10 million manat hit 42 in February 2012, and remaining unchanged compared with the previous month and increasing by 2 units compared to February 2011. Share of this category of banks in the total volume of capital of all banks was 99.5 per cent in February and in January and 98.5 per cent in February, 2011.

At present two banks do not meet the CBA requirement on capitalization (the minimum size of the capital should be 10 million manat). The first bank (with share of 0.3 per cent) has capital ranging from 5 million to 10 million manat, and the second (0.2 per cent) - from 3.5 million to 5 million manat.

The official exchange rate is 0.786 manat to $1 on May 9.