CBA's decision over capital requirements for banks comes as surprise

The decision of the Central Bank of Azerbaijan (CBA) about 5-fold increase in the capital requirements for banks came as a surprise to the banking sector.

"When, in 2007 - 2008's the Central Bank increased its regulatory capital requirement from 5 million to 10 million manat, it was known that this process [increasing of the requirements for total capital] will continue in the future. And we expect the increase of the minimum requirement up to 25 million manat, and 50 million manat was unexpected for us," deputy general manager of the Baku branch of National Bank of Pakistan (NBP Bank) Sahib Guliyev told Trend.

The minimum total capital of existing banks, as well as the authorized capital of newly established banks increased to 50 million manat by the decision of the Central Bank of Azerbaijan (CBA) adopted on July 25, 2012.

"As the decision on the capitalization of operating banks will come into force since January 2014, they will have time to take the necessary measures," Guliyev said.

On the other hand, he believes that this requirement will create some financial difficulties for many banks in the country.

There aren't many banks in Azerbaijan that have such large cash resources, and it isn't easy to collect such amount of money. Accordingly, the decision of CBA can help to ensure that small and medium-sized banks will be forced to consolidate. It is normal, as today there are 43 banks, which is very much, and the optimal number of banks for Azerbaijan should be no more than six," Guliyev said.


/Trend/