Azernews.Az

Azerbaijan's central bank intends to toughen requirements for new banks to improve the quality of operations in the country's rapidly growing banking sector.
As part of the efforts, the National Bank of Azerbaijan (NBA) plans to significantly raise the minimum charter capital of local banks declared during their registration.
"We are not very happy with the initiatives on opening new banks and are therefore considering increasing the minimum amount of capital required," NBA deputy board chairman Rufat Aslanli told reporters in Kyiv, Ukraine. "10 million manats, or some $12 million, is currently considered the norm. I believe this amount will be raised several times."
As an example, he cited the fact that nine out of 46 Azerbaijani banks are not involved in insuring deposits and are not authorized to draw deposits.
"To slow this boom down, we deem it necessary to restrict the process," the bank executive said, adding that NBA has always welcomed and will continue to support the opening of subsidiary banks of well-known international financial institutions in the country.
Russia's second-largest bank VTB plans to buy out one of the local banks. According to Aslanli, VTB president Andrey Kostin has previously stated that his bank planned to purchase one of Azerbaijan's top 10 banks.
"The process of coordinating the business strategy with NBA is currently under way," Aslanli said, adding that the sides were working to agree outstanding matters including those concerning documentation and approaches to doing business.
The NBA deputy board chair said that as soon as the central bank receives the new version of the business strategy, it would consider in the soonest time possible VTB's gaining capital in one of Azerbaijan's major banks. He did not spell out the bank for the time being.
Another major bank - French Societe Generale - intends to acquire a significant share of the charter capital of an Azerbaijani bank. "They have expressed interest in investing or acquiring a considerable share in one of existing banks but did not elaborate which bank was implied," Aslanli said.
He went on to say that the European Bank for Reconstruction and Development (EBRD) was also in talks with a local bank on buying a share in its capital. Several foreign investment funds are negotiating with local banks on entering their capital structure.
"Foreign capital is involved today in 21 out of 46 Azerbaijani banks, but there is a share of international financial institutions and investment funds, which means this is not permanent participation. We would like for direct investment in the banking sector to be more long-term and for banking technologies to come along with money," Aslanli concluded.