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CLOSURE OF HSBC BAKU BRANCH - YET ANOTHER BLOW ON AZERBAIJAN'S SHATTERED REPUTATION AS "NEW MARKET WITH EXCELLENT FUTURE"

JULE 15. The HSBC Baku Branch was officially closed June 30, which was yet another blow on the Azerbaijan's shattered reputation as a new market with excellent future, David Stern, an independent journalists of the EurasiaNet, reports.

There was a moment when the bank had accumulated $60 mln on its corporate and individual accounts. But for many people the closure symbolizes general public disappointment against the background of individual enrichment on oil. Paradoxically, the branch was closed at the height of optimism in the oil sector.

The British Petroleum is implementing three multi-million projects in Azerbaijan: oil, gas and pipeline, including, Baku-Tbilisi- Ceyhan, the feasibility of which was questioned by certain experts a year ago.

Despite optimistic views in the oil sector most Azeri businessmen are depressed. Charles Mason, the head of the HSBC Baku Branch, says the branch was closed mainly because of an overestimated demand for non-oil enterprises.

The branch was opened in 1996 at the height of oil-fever. The Azeri shelf promised big profits. However, the $13 mln investment in it yielded nothing but annual losses.

Mason explains this by the fact that the HSBC market goes far beyond the oil sector. However, the non-oil economy must grow to be able to attract investments. Everybody knows that non-oil investment is very low at present.

Corruption is rampant: it forms a pyramid where lower officials who often buy their posts pay tribute to their bosses. As a result, the higher ranks have shares in the largest Azeri companies.

To remind, CEO of the HSBC Bank Armenia Charles B.Gregory told ARMINFO earlier that the bank was not going to leave Armenia; moreover, it was going to increase the crediting in the country's economy by 20%. He said the bank had an active position in Armenia's banking sector and continued to invest big amounts in the development of various enterprises, in staff training and in service expansion.

Gregory said the banking competition in Armenia had become much healthier over the last years