WB experts talk on Azerbaijan’s positions in Doing Business ranking
Decrease of Azerbaijan’s positions in the World Bank’s (WB) Doing Business 2018 ranking on a number of indicators doesn’t mean that the country doesn’t work in these directions, WB expert Maria Gamez told Trend.
She said that Azerbaijan carries out a lot of work for development in these areas and achieves rapid growth rates, but the countries of the region are ahead of Azerbaijan on these indicators.
In addition, a number of reforms carried out by Azerbaijan fall out the reporting period, and they will be taken into account in the WB’s next report, she noted.
For example, Azerbaijan lost several positions on “Getting Credit” indicator, she said. This is explained by the fact that Azerbaijan didn’t adopt the law on registration of movable property at the time of writing the report, she added.
In other countries of the region, this legislation was applied long ago and bears fruit, she said.
In turn, WB expert Klaus Koch-Saldarriaga noted that Azerbaijan also lags behind the region on “Dealing with Construction Permits” indicator.
On average, 16 procedures are required for obtaining a building permit in the region, while 21 procedures are required for that in Azerbaijan, he added.
Azerbaijan ranked 57th among 190 countries in the Doing Business 2018. The distance to frontier score stood at 70.19. This is while in the previous report, Azerbaijan ranked 65th and scored 67.07.
The rankings are based on the average of each economy’s distance to frontier scores for the 10 topics included in this year’s aggregate ranking. This measure shows how close each economy is to global best practices in business regulation. A higher score indicates a more efficient business environment and stronger legal institutions. Thus, Azerbaijan’s position in this report has improved compared to the last year's report.
The WB said that during the reporting period, Azerbaijan has carried out four reforms, as compared to three during the previous reporting period.
Major Azerbaijani bank starts talks with new buyer
Azerbaijan’s Bank Respublika and NBCBank have started negotiations on merger, a source in the country’s banking market told Trend.
For Bank Respublika, which is looking for buyers of some of its shares, this is the second attempt of merger. Earlier, the bank negotiated the merger with Azerbaijan’s Rabitabank, however the talks were unsuccessful.
The reason is that Rabitabank was ready for merger only if it received 70 percent of shares of Bank Respublika. However, shareholders of Bank Repsublika don’t want to completely lose control of their bank.
“As a result, the parties couldn’t come to an agreement and it was decided to stop the negotiations,” the source noted. “At present, Bank Respublika is discussing the possibility of merger with NBCBank.”
The terms of the current talks are completely different, the source added. In case of successful negotiations, the shareholders of both banks will receive equal shares in a newly merged bank, and this satisfies Bank Respublika, said the source.
As of July 1, 2017, 14 individuals and five legal entities, including members of the Supervisory Board Natig Guliyev and Elchin Guliyev, as well as Deutsche Investitions und Entwicklungsgesellschaft and Sparkassen International Development Trust were Bank Respublika’s shareholders.
Nurgun Group company is the founder and one of the shareholders of NBCBank. In total, the bank has nine shareholders (seven individuals and two legal entities). The source added that for Bank Respublika, the issue of merger is very important for the bank’s existence, and the decrease in the volume of capital was the reason for merger.
The regulatory requirement for the capital of banks is 50 million manats. The total capital of Bank Respublika at the beginning of July 2017 was 51.9 million manats, and by the end of the third quarter, this figure dropped to 46.2 million manats. In addition, the bank’s loss increased from 0.583 million manats in the first half of the year to 1.6 million manats at the end of the third quarter. Unlike Bank Respublika, NBCBank keeps its profitability. In the third quarter of 2017, the bank’s profit amounted to almost 2.5 million manats, and the bank’s total capital amounted to 55.8 million manats.
Two more banks may merge in Azerbaijan
NIKOIL Bank and AccessBank, the two banks with foreign capital in Azerbaijan, are negotiating the merger, a source in the country’s banking market told Trend. The negotiations are at an early stage, the source noted, adding that NIKOIL Bank’s takeover of AccessBank is being discussed.
AccessBank owns a 100 percent foreign capital. AccessBank’s shareholders include the Black Sea Trade and Development Bank, the European Bank for Reconstruction and Development, the International Finance Corporation, KfW Development Bank, Germany’s LFS Financial Systems and AccessHolding companies.
Although the shareholders of NIKOIL Bank include local companies (Topaz Investments, ISR Holding) and individuals, Vagit Alekperov, head of Russia’s LUKOIL oil and gas company, is the final beneficiary. It is yet unknown known how the shares of the merged bank will be distributed, considering the presence of such a great number of shareholders, the source noted. It is possible that the foreign shareholders of AccessBank completely sell their shares, said the source.
Despite all this, the bank maintains its stability, as it has a capital of 140 million manat, and the main guarantor is the availability of such a list of foreign shareholders.
NIKOIL Bank has been operating in Azerbaijan since 1994, and AccessBank since 2002.