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Recent events in the banking sector of Azerbaijan: those banks with 100% foreign investment, such as the Baku branch of the Middle-East Bank HSBC and Bay Bank, have refused further presence in the financial markets of the country; Azerbaijan's central bank recalled the licence from successful banks. This all testifies to the fact that rapid events are taking place but are perhaps being concealed from the public. However, the banks of the country have always held the public's rapt attention.In connection with this matter, Aghakerim Hajiyev, reporter for "Azerbaijan Today", interviewed the Chairman of the Management Committee of "Kochbank Azerbaijan", Mr. Nurjan Akturk.
A.T.: Nurjan bey, is it difficult to work in Azerbaijan?
N.A.: No, it's not difficult, since on the one hand, we are Turks and on the other hand we are also foreign investors.
A.T.: Then how can you explain the fact how foreign banks, such as HSBC and Bay-Bank, and also banks with Turkish
capital have begun to leave Azer-baijan? Meanwhile, 16 banks with the shares of foreign capital, (the biggest part of
which included banks with shares of Turkish capital) have been functioning here recently.
N.A.: Without doubt there is a problem that banks with foreign investment refuse to further participate in intermediary activities in
the financial market of Azerbaijan and this problem has various aspects. I'll try to explain some of them. First of all, it is
necessary to distinguish between banks with 100 percent share of Turkish investment that, as everybody knows, are under the
control of large investment and state structures of Turkey and between the joint banks with the investments of Turkish
businessmen. The very fact that those banks with 100 percent share of Tur-kish investment, such as Bay Bank, are leaving
the market is indeed a bad sign, it is negative propaganda, if you want we can call it warning sign that all is not well in the
financial market of Azerbaijan.Any new or potential investor, before coming to the country, makes inquiries about the state of
the market and if they consider it as unfavourable, then they will obviously not want to invest.The second group of banks (joint banks with
the investments of Turkish businessmen) is quite another matter. They might have problems with liquidity, with the required level
of investments. For example, some years ago the Renais-sance Bank, a joint bank with Turkish investments, closed for the simple
reason that the bank wasn't able to gather the required level of authorized capital stock as established by the central bank of
Azerbaijan.Then, Azerbaijan was undergoing a transitional period but now is the time when old traditions and laws are being
relinquished to make way for new liberal economic reforms. However, this is very difficult process. It's natural that such
processes leads to some difficulties and problems in the private sector of the economy. One part of these problems is
objective, and needs time and a concentrated effort by the government; the other part is subjective, and can be solved
in a very short period of time, and all that is required is the wish and the determination of the government. By the
way, we (foreign in-vestors) have discussed these problems and difficulties with the President during our meeting, and
Heydar Aliyev assured us that all measures would be taken from his side to eliminate these difficulties. Foreign investors
come to the country to earn money and if there is hope for a better future, they are ready to bear any possible setbacks and to overcome difficulties.
A.T.: Can you specify the difficulties and problems you are talking about more concretely?
N.A.: The biggest displeasure is caused by the existing measures of state inspection, and primarily the quantity and the frequency of various
financial audits that are carried out by governmental bodies.Another problem is the jealous attitude of state structures to-wards the business
activity of foreign investors. It is inadmissible when a successful inves-tor is deprived of business in all possible ways, just because it is
turning a profit. The foreign investor should be given the possibility to work, earn and expand, as in Kazakhstan for example. The investor is
eager to give bribes, to pay taxes, of course within reasonable limits, customs duty etc., but one cannot deprive him of his or her of business
after complying with all that.There is a whole series of other unsolved problems. That's why some notable banks refused to further increase
their authorized capital stock, because they lost faith in the rapid improvement of the situation in financial markets. Such banks don't leave
other republics of the former USSR, in particular Armenia, though everybody is well aware of the state of the financial sector of the Armenian
economy. For us, the departure of any foreign bank from the market is very profitable as it is possible we will gain their clients. However, all this gives rise to anxiety and the government should think twice.
A.T.: One connects the difficulties in the financial market of Azerbaijan with the activity of the National Bank of Azerbai-jan (NBA) in various segments of the
financial market: in the credit market, the money market, the stock market, etc. One may allege that NBA doesn't apply the necessary instruments to the state
of the market. Is this right or not?
N.A.: The difficulties in the financial market are being solved in 2 directions. On the one hand by increasing the role of NBA in the banking sector, and on the other, by further liberalizing the market
itself.New bank legislation, corresponding to European standards, is now being prepared in Azerbaijan. We, together with the Association of the Banks of Azerbaijan, TACIS and other structures are taking
part in its revision. All these regulations are reflected in the new bank legislation. NBA succeeded in suspending inflation in 1992-1994 at the rate of 1700 percent a year, the devaluation of the
state currency at a rate of 1200 percent a year. That's why I don't really understand what discrepancy of implementation of the instruments from NBA we are talking about.
A.T.: However, decreasing the level of inflation and devaluating the national currency actually decreased the level of business activity in the country and this is connected
with the lack of currency. The latter is the negative characteristic of NBA's activity.
N.A.: The containment of business activity in the country is connected with the fear of potential investors within the country. There are a lot of solvent people in Azerbaijan. There
are not so many luxurious villas and private residences in Ankara as there are in Baku. People have a fear of showing their money and a lot of Azerbaijanis' money is kept in foreign
banks. That's why it is necessary to strengthen the existing bank system, to regain the trust of the population which was lost after the well-known events of 1992-1994, to eliminate
the jealous attitude of state officials towards businessmen, the unnecessary check-ups from state structures.A lot of Azerbaijani's have their money in England and Turkey. There will
not be a lack of money if they return it to this country.
A.T.: In conclusion, please tell us about some of the perspectives of your bank.
N.A.: We are waiting for the results of the reforms and we are developing a client base. We hope that our branch network will appear in different regions of Azerbaijan, particularly in Gandja
and Sumgayit, with the realization of the second stage of the privatization program, with the further development of different sectors, particularly the petrochemical industry.
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