Azerbaijani banks consider new strategy
By Nigar Orujova
Azerbaijan, a country rich with hydrocarbon resources, is now in the process of transition to a completely new model of non-oil economy and banking sector and plans to revise its development strategies.
The dramatic drop in the oil price in mid 2014 affected Azerbaijan’s banking sector the most, since banking capital is dependent on energy revenues. Today, the banking sector is eager to adjust to the new state strategy.
Head of the Azerbaijan Banks Association, Zakir Nuriyev believes that it is important to hold meetings with government agencies to jointly develop further strategy.
“We have regular meetings with various organizations, ministries, and working groups. Our goal is to develop a new banking strategy, and for this purpose we need to get acquainted with the strategies of the ministries and organizations associated with the banking sector,” he added.
Nuriyev went on to add that in the future, they plan to hold similar meetings with other government agencies.
The ongoing discussions do not relate to any specific data, figures or issues, he stressed, but cover global issues.
We have held meetings of the working groups established under the ABA and identified the main areas of work.
Also, a meeting was held with the head of the State Committee for Securities and with the leadership of the Central Bank.
The new strategic planning will focus on more responsible lending, financing of SMEs and corporate sector, as well as issues relating to the reduction of income of banks as a result of lower interest rates in 2015 and cost optimization due to reduction of profit.
In Azerbaijan, there are 43 banks, two of which are state-owned, with over 750 branches. Banks of the country have been growing rapidly with the state support.
The CBA set higher capital requirements for banks bringing the capital floor up to 50 million manats ($47.6 million) to force bank consolidation and reduce risks. Larger banks meant larger loans to support the development of the economy, especially by switching focus to financing retail and small and medium-sized enterprises.
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Nigar Orujova is AzerNews’s staff journalist, follow her on Twitter: @o_nigar
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