Azernews.Az

By Fatma Babayeva

Two banks of Azerbaijan, Bank Standard and the International Bank of Azerbaijan are in talks to merge their assets within the framework of the plan on consolidation of Azerbaijan’s banks, a source on the country's banking sector told Trend news agency on April 21.

At this stage, no merger agreement has been reached yet, the source told. However, the issue of their consolidation will be resolved by the end of April 2016.

Meanwhile, Bank Standard also appealed to the Financial Market Supervisory Body of Azerbaijan for the financial support. The supervisory body is currently examining the situation within the bank.

Bank Standard, which is one of the largest private commercial banks operating in Azerbaijan, holds considerably high volume of deposits.

Overall, the consolidation of the banks is likely to lead to financial recovery of the banks in the country as this ongoing process appeals to the interests of both owners and clients of banks.

The International Bank of Azerbaijan is the largest bank and financial services group in Azerbaijan and the region.

The Azerbaijan Ministry of Finance is the bank’s main shareholder, possessing a 50.2 percent equity stake. The bank holds from 40 to 50 percent of the Azerbaijan banking system’s total assets.

The Central Bank of Azerbaijan has terminated the licenses of Texnika Bank, the Caucasus Development Bank, Atrabank, Gandja Bank, Bank of Azerbaijan, United Credit Bank and NBCBank since the beginning of 2016.

Texnika Bank was the last bank that the CBA revoked license on February 2, 2016.

The consolidation process will allow to stabilize banks which have deliberately decided to merge, to increase their share in the market and to get more revenues.

Moreover, the International Finance Corporation and the European Bank for Reconstruction and Development support the consolidation of banks in Azerbaijan by evaluating it as a way leading to the financial recovery of the banks.

In addition, the banks of the country have already experienced consolidation earlier. UniBank was formed through merging two commercial banks in 2002 - MBank and Promtexbank. The EBRD acquired a 15-percent share and 8.3333 percent is owned by the German Investment Corporation DEG during this merger deal.

Besides, the Bank of Baku merged with IlkBank in 2005.

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Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva

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