Baku, Azerbaijan, Nov. 14
By Sara Israfilbayova - Trend:
The closure of insolvent banks, which started in 2015, was appropriate, moreover, financial restructuring of the IBA (International Bank of Azerbaijan) was timely and successful, IMF Mission Chief for Azerbaijan Mohammed El Qorchi said in an interview with Trend and AzerNews.
However, he noted, the restructuring process remains incomplete.
“IBA still faces several challenges, including a large open currency position and questions regarding its business model,” he said. “Also, several problematic banks remain in the system.”
Further, he said that the authorities should continue to pursue a prompt clean-up of the banking system to support growth. Bad loans need to be resolved, and some banks need fresh capital, he added.
“They should prepare for the expiration of the blanket deposit insurance guarantee, set to take place in March 2019,” he said.
The IBA, founded in 1992, has been at the stage of recovery since July 2015, which is associated with preparation for privatization of state-owned shares of the bank. To restore the bank's financial position, its distressed assets were transferred to the Aqrarkredit non-bank credit institution.
In exchange for distressed assets, the Aqrarkredit provides the IBA with liquid funds. At the same time, the restructuring of IBA's foreign obligations has recently been completed. Over 95 percent of the Bank's shares are owned by the government.
Eleven banks – Caucasus Development Bank, United Credit Bank, Bank Standard, Zaminbank, Dekabank, Kredobank, Atrabank, Bank of Azerbaijan, Ganjabank, Texnikabank and Parabank were closed in Azerbaijan in 2016.
As a result, the number of banks implementing their activities in the country shrinked to 30.
(1.7 manats = $1 on Nov. 14)