Baku, Azerbaijan, July 12
By Anvar Mammadov – Trend:
Removing toxic assets from the balance sheets of Azerbaijani banks is impossible without the participation and support of the state, Head of Azerbaijan Banks Association (ABA) Zakir Nuriyev told Trend.
“There are various mechanisms for removing toxic assets from the balance sheets of commercial banks in different countries,” Nuriyev said. “It is also possible to use one of these mechanisms in Azerbaijan, but all of them require the participation of the Central Bank of Azerbaijan.”
He noted that post-devaluation processes, as well as Azerbaijan’s transition to non-oil economy are the main reasons for the growth of toxic assets in the balance sheets of the country’s banks.
“Over the past seven years, the banking sector, without taking into account the International Bank of Azerbaijan, has issued loans worth over 75 billion manats to the economy,” Nuriyev said. “The major part of this sum was returned to banks, and currently, their loan portfolio is slightly more than 15 billion manats. Some 1.5 billion manats of this amount account for problem loans. Considering these figures, it is clearly necessary to remove these toxic assets from the banks’ balance sheets or to use a mechanism of state support for the removal of these funds.”
“There are several effective mechanisms, and now it is necessary to discuss them with the Financial Market Supervisory Authority of Azerbaijan and the country’s Central Bank,” he added. “This will take time, but we must use these mechanisms so that banks can again actively lend to the Azerbaijani economy.”