By Nigar Abbasova
The International Bank of Azerbaijan (IBA), Azerbaijan's largest lender by assets, will not be privatized this year.
Preparations for the process of privatization have not yet been completed and the bank will not be privatized in 2016, Reuters quoted Rufat Aslanli, head of the country’s Financial Market Supervisory Body (FMSB).
"The government has resolved the majority of IBA's problems, but the privatization process takes some time, and privatization this year is not realistic," he told the agency.
The shortcomings in the management, investment and loan policy of the International Bank of Azerbaijan in recent years, as well as financing less efficient and risky investment projects deteriorated the financial state of the bank, caused increase in the share of distressed assets and reduced its liquidity.
IBA's distressed assets had been removed from its balance sheet and transferred to the state-owned, non-banking credit organization Agrocredit to recover financial position of the bank. Bonds worth 3 billion manats ($1.8 billion) were issued under state guarantee to provide the bank with liquid funds.
Aslanli also mentioned that banks of the country have already adapted to the external shocks, which led the central bank to float the manat currency and close weak lenders.
"The adjustment of banks to new realities is now over, and we can talk about the beginning of improvements," he said.
Previously, Finance Minister Samir Sharifov, talking to Voice of America said that the law enforcement agencies helped to return bad loans worth around 400 million manats ($268 million) to the International Bank of Azerbaijan (IBA). As for the IBA's privatization, the minister said the process will begin after the bank's recovery.
"The bank's recovery will take some time. Financial advisers, most likely influential investment companies, will be involved immediately after this process. Thus, the bank will be prepared for privatization," the minister said.
Currently, 33 banks have licenses for implementing banking activities in Azerbaijan.
Licences of EuroBank and Azerbaijan Credit Bank were abolished in 2015. Since the beginning of 2016, the Central Bank of Azerbaijan has terminated the licenses of the Caucasus Development Bank, Atrabank, Ganja Bank, Bank of Azerbaijan, United Credit Bank and NBCBank, DekaBank, KredoBank, Parabank and Zaminbank. Later, the license of NBCBank was restored due to the bank's plans to merge. The Caucasus Development Bank and AtraBank also have such plans.
Earlier Head of the FMSB Board of Directors Rufat Aslanli said that currently the country has no troubled banks except the International Bank of Azerbaijan and Bank Standard. Nevertheless, the closure of these banks is not currently on the agenda.
Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova
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