BAKU, Azerbaijan, September 21. Consolidation processes in the banking sector may contribute to increasing the sector’s financial stability and efficiency, the Central Bank of Azerbaijan (CBA) told Trend in response to an inquiry.
The CBA noted that when assessing such transactions, it focuses primarily on the capital and liquidity position of the bank formed as a result of consolidation, the quality of its assets, corporate governance and risk management systems, as well as its continued compliance with prudential requirements.
“At the same time, the possible impact of such transactions on the stability of the banking sector as a whole and systemic risks is taken into account. Overall, the CBA’s main focus is to ensure that consolidation processes do not undermine financial stability, that banks operate in a sound and sustainable manner, and that an effective competitive environment is maintained in the banking services market,” the statement said.
The CBA emphasized that banks’ decisions regarding consolidation are primarily made within the framework of their shareholders’ business strategies and commercial decisions.
“The CBA’s role is to assess whether such initiatives comply with legislative requirements and prudential criteria. Since consolidation involves commercial negotiations and confidential information, any consolidation process is assessed by the CBA in accordance with the established procedure only when it reaches the stage at which the CBA’s approval is required under the legislation,” the statement said.
The CBA said that its main priorities in possible consolidation processes in the banking sector are preserving financial stability, strengthening banks’ resilience and maintaining a healthy competitive environment.
“Given that an increase in the market share of individual banks as a result of consolidation may lead to an increase in systemic importance and risk concentration, the possible impact of such processes on financial stability is closely monitored. The objective of the CBA’s macroprudential policy is to prevent the accumulation of systemic risks and strengthen the resilience of the financial system to shocks,” the statement said.
On September 11, the shareholders of Bank Respublika and AccessBank approved the key terms of a strategic transaction envisaging the acquisition of 100% of AccessBank’s shares by Bank Respublika. The transaction is planned to be completed by November 2026.
As part of the transaction, the existing shareholders of AccessBank will acquire newly issued preferred shares representing a total of 25% of Bank Respublika’s charter capital.
Following the acquisition of the shares, the two banks will initially continue to operate separately. Their subsequent merger into a single bank will be carried out in accordance with the relevant regulatory requirements.
The total assets of the bank to be formed as a result of the transaction are expected to amount to 4.5 billion manat ($2.6 billion), while its loan portfolio is expected to reach 3.3 billion manat ($1.9 billion).
