The Azerbaijani Central Bank is confident about the success of the capitalisation process of the banking sector, the CBA reported to Trend on Monday.
According to a decision of the bank administration, the minimal amount of aggregate capital of acting banks as of 25 July and authorised capital of newly established banks was increased from 10 million manats currently (12.7 million dollars), to 50 million manats (63.7 million dollars).
The new regulation pertaining to the minimal amount of aggregate capital for acting banks will come into force starting January 2014. Most experts, including international preference agency Moody's Investors Service, expect a serious cut in the number of players in the banking system in Azerbaijan.
"Research conducted shows that the adapting potential of the banking sector to this process is high. The capital volume of a major part of the sector has already exceeded 50 million manats.
The CBA provided the banks with a transition period for precision of the plans on capitalisation and their gradual realisation", the CBA said,
The Central Bank will permanently monitor the capitalisation process and is going to assist the banks.
Several banks have already announced their plans on capitalisation. This process will be carried out with no obstacles as previously, for the sector as well as for consumers the Central Bank noted.
In the opinion of the regulator, new requirements to the capital will provide strengthening of the banks' capital position, increase capital quality and effectiveness of financial intermediation, strengthen the banking sector's financial stability and potential, increase the development of a corporative administration system and also protection of investor and contributor interests.
"Better capitalisation along with an increase of the sector's resistance to possible shocks through economies of scale will enable the presentation of various and cheaper products by the banks. This will strengthen the sector's effectiveness and concurrency potential which will serve the purpose on the increase and diversification of economy and development of financial sector according to the strategy 'Azerbaijan in 2020: a view to the future', The CBA said.
Some 43 banks are currently operating in Azerbaijan.