2023-05-18 18:57:51
The Central Bank canceled the license of “Gunay Bank”. The official statement states that the reason for the decision is that the total amount of capital of the bank is less than the minimum amount defined for banks. The Central Bank applied to the court for liquidation of that institution due to bankruptcy. With this, the number of banks operating in the country has decreased to 24. Before the devaluation, in 2014, 44 banks were operating in Azerbaijan. This means that in the last 9 years, 20 banks have failed in the country. In other words, 45 percent of banks in the country were closed.
According to the Central Bank, the cancellation of the banking license of “Gunay Bank” OJSC does not pose any threat to the financial stability and financial stability of the banking sector. However, we must not forget that the closure of any bank in the country undermines citizens’ confidence in the banking system. On the other hand, it cannot be said that confidence in the banking sector in Azerbaijan is high. It should not be forgotten that the deposits of the population and businesses are of vital importance for the banks of Azerbaijan, because the funds of the banks in the country are mainly formed at the expense of deposits. Poor development of financial markets in Azerbaijan makes banks dependent on deposits. Currently, the share of deposits in the formation of bank resources is higher than 80 percent. In this regard, independent experts also think that the Central Bank should close down weak banks and try to make them healthy.
Why are small banks weakening?
One of the factors aggravating the situation of small banks in Azerbaijan is related to high concentration in the country’s banking sector. After all in the country, social payment and salary cards in the public sector belong to only two banks. These are the state-owned International Bank of Azerbaijan and Kapital Bank, in which the president’s family members are shareholders. Since these two banks provide banking services, they receive millions of manats from state institutions every year. At the same time, since the majority of the country’s population receives their salaries and social payments from these banks, these banks also gain an advantage in selling loans to them. Therefore, almost 80 percent of assets, credit portfolio, and profits in the country’s banking system now belong to the state and “Pasha Holding”. As the main income is shared among these banks, the displaced banks can have a smaller share of the market. The “Financial Stability” report published by the Central Bank in March also states that The banks in the top three in terms of the volume of profit in Azerbaijan have 78 percent of the total profit. These three banks are the state-owned International Bank of Azerbaijan and “Kapital Bank” and “Pasha Bank” belonging to “Pasha Holding”. Thus, due to the poor development of the business environment in the country and the entrepreneurship of officials, small banks have less room for maneuver. This leads to the weakening of their financial indicators.
Freedom radio
#deposits #protected #Azerbaijan #Freedom