Baku, Azerbaijan, May 30
By Azad Hasanli- Trend:
Azerbaijan needs to consolidate banks, Director of the Public Management, Financial Sector, and Trade Division of the Central and West Asia Department of the Asian Development Bank (ADB) Betty Wilkinson said.
She said that 45 banks is too many for a country with the economic volume of Azerbaijan.
"The first thing to see how well established the management system in the banking sector is and what the sources of financing the banks have," she said, adding that consolidation is a normal process that takes place in many countries. "It is necessary to look at their customer base and development strategy, and only then consolidate small banks with larger ones."
At the same time, Wilkinson said that the Asian Development Bank does not yet have plans to participate in a possible merger or acquisition of a stake in one of Azerbaijani banks. "But if we received such a request, of course we will consider it, but no such appeals have been received yet," she said.
At present, there are 45 banks in the country (two of them are the state-owned ones), more than 13 of which have completed the first quarter of 2015 with a loss.
Many experts point out that the number of banks in Azerbaijan does not correspond to the size of the economy, while the optimum number in 25-30 banks.
Furthermore, one of the problems of the sector is that many banks attempt to be universal and cover a wide range of areas, while the country has few specialized banks.
Azerbaijan already has some good examples of consolidation of banks with the participation, for example, of the EBRD. The present UniBank was formed by the merger in 2002 of two commercial banks - MBank and Promtexbank, where the EBRD acquired a 15 percent share, and 8.3333 percent is owned by the German Investment Corporation DEG. Following this, in 2005, the merger of Bank of Baku with IlkBank took place.
EBRD in May 2015 has reiterated its readiness to participate in the capital of Azerbaijani banks in case of their merger.
As of March 1, 2015, the assets of the Azerbaijani banking sector amounted to 28.85 billion manta, which is 34.7 percent more than the same period of 2014, the report of the Central Bank of Azerbaijan said.
The basis of the assets of the banking sector (66.2 percent) accounted for loans delivered to the clients in the amount of 19.09 billion mantas, investments (2.55 billion manats) and funds on correspondent accounts (2.38 billion manats).
Loans and deposits delivered by the banks to the financial sector amounted to 1.4 billion manats.
The lion share in the structure of liabilities accounts for deposits standing at 12.45 billion manats (43.14 percent). Loans and deposits from the financial sector amounted to 10.37 billion manats (35.9 percent).
The capitalization of the banking sector of the country in March increased by 2.9 percent and amounted to 4.23 billion manats. In annual terms, the capital of banks increased by 24.4 percent.
Edited by CN
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