Director General: Azerbaijani Central Bank received no official appeals over consolidation

Business Materials 27 September 2013 15:48 (UTC +04:00)
The Azerbaijani Central Bank (CBA) hasn’t received any official appeals about consolidation.

Azerbaijan, Baku, September 27 /Trend, A.Akhundov/

The Azerbaijani Central Bank (CBA) hasn't received any official appeals about consolidation, Director General of CBA Rashad Orujov told Trend on Friday.

"We are still waiting. We always say that it is not an easy decision for banks as it is necessary to define a business model for the future of the bank on which segment it will target and what happens in the case of a merger. All this should be properly assessed, therefore it's not an easy process," Orujov said.

When the CBA announced its decision on July 25, 2012, to increase the requirements for aggregate capital from 10 to 50 million manat, only 10 banks exceeded this standard which covered 87 per cent of the assets of the entire banking sector of the country.

Today, according to a financial statement on the banks, the aggregate capital of over 15 banks in the country exceeds 50 million manat. Another five banks declared an increase of their capital through placement of new share emissions on the stock exchange. In total, the number of capitalised banks within the new requirements is slightly more than 20 out of the 43 currently operating banks in Azerbaijan's banking sector.

According to Orujov, the Central Bank is aware of the negotiations banks hold among themselves, as well as the contacts with foreign investors.

"Some banks are negotiating to attract foreign shareholders. We regard this as a normal process and if it helps capitalisation, then why not? We welcome this," Orujov said.

There has already been a successful experience of consolidation in the history of Azerbaijan's banking sector. If there were over 250 banks with too low capital in the early years of transition to a market economy, the subsequent consolidation led to a six-seven fold reduction in the number of banks and as a result, strong banks remained in the market. To date, foreign capital exists in 22 Azerbaijani banks.

Official exchange rate on September 27 is 0.7845 AZN/USD.