Azernews.Az

The world's leading banks are entering Azerbaijan's market, the country's central banker has said.
German Commerzbank and US Citibank intend to launch operation in Azerbaijan in 2008, the National Bank of Azerbaijan (NBA) board chairman Elman Rustamov said. "These banks initially established representations in the country. Starting this year, the status of these representations will be increased and they will be turned into subsidiaries," Rustamov said.
Analysts say that the entry of new banks to the domestic market could affect interest rates on loans and deposits. The development is not going down well with local banks, which will face challenges while competing with foreign majors considering their cutting edge technologies and huge financial resources. Azeri banks, in turn, plan to start entering overseas markets this year.
"Our banks will be able to sell securities in international markets, which will promote their recognition and strengthen their positions abroad," the central banker said.
He emphasized that overall, the situation in the country's banking sector has improved. The amount of savings and deposits doubled in 2007, which was achieved due to the start of operation of the Deposit Insurance Fund. 83% of all deposits have been insured. Whereas only 4,000 manats of the deposit was insured last year, the amount will make up 6,000 manats (up to $7,142) starting in 2008. Rustamov pledged that the work will be continued in 2008, allowing to increase both the number and the bulk of deposits.
As of December 1, 2007, funds worth 3.064 billion manats ($3.64 billion) were held in local banks, or 37% up from a year earlier. About 1.518bn manats ($1.807bn) of the amount was held in the national currency, while 1.545bn manats ($1.839bn) - in foreign currency.