BAKU, Azerbaijan, June 9
By Eldar Janashvili – Trend:
For the Azerbaijani financial market and banking sector, May 2020 was distinguished by the enhanced digitalization and intensification of cooperation with international organizations and foreign structures.
In early May, the Azerbaijan Banks Association, the Central Bank of Azerbaijan (CBA), the International Finance Corporation (IFC), the Swiss State Secretariat for Economic Affairs (SECO) and the Savings Banks Foundation for International Cooperation (SBFIC) have prepared educational videos on using the banking services for citizens due to the great importance of the digital transformation of the economy and the transition to the cashless payments.
On May 5, PASHA Bank revealed the main goals of the bank’s development strategy for 2021-2023 which is under preparation.
“The bank intends to continue expanding its activity in the real sector of the economy, in particular, to support small and medium-sized enterprises (SMEs) by increasing lending in this segment by 3-4 times,” Chairman of Board of PASHA Bank Taleh Kazimov said during a video conference. “The digital banking will be another main sphere of PASHA Bank's development strategy.”
“The bank’s subsidiary in Georgia began to offer retail banking services under the RE | Bank new brand,” the chairman added.
A day later, the Austrian Raiffeisen Bank (RBI) expressed the interest in further strengthening of the relations with Azerbaijan, stressing that the main goal of the bank is to further assist the developing markets in the CIS region for rapid and sustainable growth.
"We look forward to further improve the quality and quantity of services that we will render to our Azerbaijani partners,” the bank said. “Besides the traditional and advanced financial solutions, we plan to strengthen the ties by increasing the number of bilateral meetings with clients. It is necessary to further improve the regulations in the Azerbaijani banking sector to enhance its position in the global market.”
Then, the Board of Trustees of the Deposit Insurance Fund decided to increase the maximum annual interest rate on the deposits in national currency from 10 percent to 12 percent since June 1, 2020. This decision was made upon the consultation with CBA and the recommendation of the Azerbaijan Financial Stability Board.
At the same time, the maximum annual interest rate on the deposits in foreign currency in the member-banks of the Fund remains at 2.5 percent.
The process of liquidation of banks and the return of deposits also continued in May. The dates were announced for accepting applications and issuing compensations on the deposits at liquidated Amrahbank OJSC and AtaBank OJSC. The applications have been accepted and the compensations have been issued by the branches of Kapital Bank OJSC related to the deposits worth up to 30,000 manat ($17,647) inclusive at Amrahbank and AtaBank since June 1, 2020.
Moreover, the board of the Central Bank revoked the licenses of NBC Bank and AG Bank due to a complete loss of capital, inability to pay off obligations to creditors and carry out the current activity prudentially and in a reliable way. Both banks filed for bankruptcy on May 12, 2020.
The total amount of the deposits of the population in four banks liquidated in 2020 amounted to 686 million manat ($403 million), owned by 215,000 depositors.
The European Bank for Reconstruction and Development (EBRD) published a forecast in mid-May. According to the forecast, the Azerbaijani economy will shrink by 3 percent in 2020 and recover by the same figure in 2021.
A few days later, the EBRD and the CBA entered into a swap agreement totaling $200 million to increase the access to the funds in the real sector during the period of coronavirus pandemic.
It is estimated that the small local companies which have faced with temporary difficulties this year will be provided with $50 million (85 million manat in national currency).
The Country Partnership Strategy of another investment bank for 2019-2023 on Azerbaijan was disclosed in May. In particular, the Asian Development Bank seeks to support the diversified and inclusive growth in Azerbaijan through the implementation of three strategic spheres, namely, stimulating of private sector development and increasing of public sector efficiency, improving of infrastructure, and enhancing of human capital.
Eldar Janashvili
Department of Economy at Trend News Agency