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Standard & Poor’s: Azerbaijan banking system has moderate competitiveness

11 June 2009 08:57 (UTC +04:00)

Baku. Vahab Rzayev - APA-Economics. Standard & Poor’s Ratings Services sees Azerbaijanâ€™s banking system competitiveness at the moderate level in the light of low financial intermediation and the exceptionally high concentration of the economy.

Standard & Poor’s said in a report on Azerbaijan banking system titled "Bank Industry Risk Analysis: Azerbaijan’s Young, Fragmented Banking System Increasingly Affected By Global Crisis" that State-owned International Bank of Azerbaijan dominates the market, with a 43% share in terms of assets, followed by about 45 private sector banks that hold a market share of 7% or less each.

According to Standard & Poor’s, the 10 largest banks in terms of assets are:

	01.01.2009		01.01.2008
	Assets (mln. manats)	Market share (%)	Assets (mln. manats)	Market share (%)
International Bank of Azerbaijan	4,370	43	2,601	39
Bank Standard	619	6	620	9
Kapital Bank	578	6	249	4
Texnika Bank	450	4	354	5
Unibank	418	4	390	6
Xalq Bank	404	4	212	3
Bank Respublika	388	4	253	4
Nikoil Bank	295	3	117	2
Azerdemiryolbank	229	2	150	2
AGBank	211	2	160	2

The report points out that some banks are indirectly affiliated with the authorities.
Complete privatization of a 50.2% state-owned stake in International Bank of Azerbaijan is unlikely in the foreseeable future, said the report.

Standard & Poor’s said that the stability of the market position of most Azerbaijani banks is not high. They lack important features such as a strong brand and customer loyalty.
As in other emerging banking systems, Azerbaijani banks are characterized by low diversification of business because their product range is dominated by easy credit and deposit products.