Azerbaijan's CBA Governor Backs Banking Sector Consolidation
He made the remarks at a press conference on Thursday following a meeting on the parameters of the interest rate corridor.
According to him, two consolidation processes have taken place in the banking sector this year.
“As the Central Bank, we generally support consolidation. We also expect consolidation to increase competition,” Kazimov said.
The CBA governor noted that the Central Bank would support any consolidation initiatives or plans in the banking sector next year.
“Of course, we support consolidation provided that it ensures the stability of the financial sector. However, we currently have no other plans in this regard. If any such case arises next year, we will inform you,” he added.
According to Kazimov, consolidation can also help improve the efficiency of financial institutions.
“Merging two troubled banks to create a bigger problem is not consolidation. We do not support this kind of consolidation. If two or more banks merge to create a stronger financial institution, we will certainly support that,” the CBA governor emphasized.
He said consolidation in the banking sector can take place through both mergers and acquisitions.
“Generally, we support consolidation and are ready to encourage banks to merge so they can become more competitive. The sector and the country are small, and the size of our economy must also be taken into account. There is no need for such a large number of small players in this market,” Kazimov noted.
The CBA governor added that smaller banks face growing difficulties in competing, particularly given the investment required in information technology and digitalization.
“Considering the investment required in information technology and digitalization, it is becoming increasingly difficult for smaller banks to compete. An effective merger or acquisition could therefore be an appropriate solution,” he said.
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