Doing Business in Azerbaijan 2009 - Azerbaijan Export ...

Significant works continued in 2008 to ensure institutional
development of the banking system. Pursuant to the Presidential
Decree of March 1, 2005 “On additional measures to further
expand the reforms in the financial and banking system of the
Republic of Azerbaijan”, activities were continued to privatize the
Joint-Stock Commercial Bank “International Bank of Azerbaijan”
and Joint-Stock Company “Kapital Bank”. JSC “Kapital Bank” was
completely privatized in 2008.
Liabilities of the banking system
In 2008 the total bank liabilities reached AZN8568.6 mln having
increased by AZN2941 mln or by 52.3%. The Deposit Insurance
Fund that started operating in August 2007 further expanded its
operations in 2008. The compensation on the Fund-covered
deposits was increased from AZN4000 to AZN6000 in 2008. The
increase of insurable amount entailed an increase in the deposits,
which, in turn, had a positive effect on credit resources.
During the year funds attracted from financial institutions (loans,
deposits and other resources from other banks) doubled thus
totaling to AZN3.1 bln as of January 1, 2009. These funds amount
to 37% of the total bank liabilities (28% as of January 1, 2008).
Banks’ external borrowings reached AZN2.1 bln during the year.
The domestic inter-bank market’s share in the total bank liabilities
remained practically flat during the year (5.2%).
Structure of bank assets.
During the reported period the total bank assets increased by
AZN3547.9 mln or 52.7% totaling to AZN10273.5 mln as of January
1, 2009. Short-term loans to customers increased by 39.2% while
long-term loans by 60.8%. As a result, long-term loans increased
65.6% to 68.7% as a percentage of the total loan portfolio against
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