Azerbaijan, Baku, Sept. 20 / Trend, A. Akhundov /
Azerbaijani Demir Bank will draw a subordinated loan from the German DEG investment company worth $12 million, Deputy Chairman of the Demir Bank Board Rauf Ahundov told Trend on Friday. The loan is to be delivered over the course of 10 years.
"We continue to negotiate with German DEG and the process can take 1-2 months," he said. "Currently, the company's representatives are in Baku. We plan to draw a subordinated loan worth $12 million, part of which will be used for paying off the remaining obligations on a similar previous loan from DEG, while a certain part will be used to increase the total capital."
According to him, at present, the bank's total capital exceeds 57 million manat. After drawing a subordinated loan, its amount will hit 62-63 million manat.
"Drawing these obligations is a good index," he said. "The objective is not only to raise funds for 10 years, but also to strengthen the image of the bank as this tool is quite risky and financial institutions rarely offer it to the banks. Moreover, while examining the policy and the banks' ability to raise funds, the rating agencies are assessing the presence of such obligations, as a bonus while assigning the rating."
The first commercial bank of Azerbaijan, Demir Bank started operations in October 1989. Shareholders of the bank include large international financial institutions, such as the European Bank for Reconstruction and Development (EBRD) and the Netherlands Development Finance Company (FMO). Demir Bank has "B" rating with a "stable" forecast from Fitch Ratings and Planet Rating.
The official exchange rate is 0.7844 AZN/USD on Sept. 20.