Even More Difficult Tests Expect Banks

"The main reason for the closure of banks is the default, which is caused by poor management, the loss of fiscal credibility and relevance," said the economist Gubad Ibadoglu, commenting on the closing of the banks Deka Bank, Credo Bank, Para Bank and Zamin Bank.

He believes the closure of these banks by the Financial Markets Control House (FMCH) indicates the presence of problems in the banking sector.

“I do not share the FMCH Board of Directors opinion on the supervision of financial markets, that the closure of four banks can somehow improve the situation, as well as to increase confidence in banks and the manat, as more serious tests expect banks. Banks’ exit from the current difficult situation as a whole depends on the state of the national economy, and especially, on the state of businesses and the household. The solution cannot be found in a short time, as the delay in reforms reinforces stagnation in the economy,” the economist said.

According to Ibadoglu, currently the best way out is the closing of the crisis banks. “I believe that the closure of banks is the best of the bad options now possible. To neutralize the negative impact on the overall system, FMCH,  the Deposit Insurance Fund and the elimination commissions should explain it to the population, and especially to the clients. This requires operational applications and the creation of hotlines. Otherwise, it will be very difficult to resolve the problems between the banks and the customers," said the expert.

 In his opinion, work should be continued on the consolidation of bank capital, which, in turn, will lead to the necessity of closing or merging of several banks.  –0---