Baku, Azerbaijan, Apr. 13
By Anvar Mammadov - Trend:
Full restoration of solvency of the International Bank of Azerbaijan (IBA) is possible only after a regular redemption of its distressed assets, said Dmitry Vasiliev, Fitch Ratings director for financial institutions.
Vasiliev made the remarks at the 5th Azerbaijan Annual Event in Baku on Apr. 13.
He said the IBA still owns distressed assets worth more than 3 billion manats.
"The volume of toxic assets of the bank is still quite high, therefore, in addition to the planned infusion of 500 million manats into the IBA capital in the second quarter of 2016, it is necessary to implement a regular redemption of toxic assets," added Vasiliev. "Only in that case can the bank's full solvency be restored."
He said that as of today, Apr. 13, the government bought back the bank's distressed assets in the amount of 3 billion manats [in January 2016].
"Redemption of a part of the bank's distressed assets resulted in a reduction of the IBA's risky assets, which in turn helped to keep the ratio of the bank's capital adequacy at the level of 12 percent," said Vasiliev.
Fitch Ratings has affirmed IBA's Long-term Issuer Default Rating (IDR) at 'BB' in March 2016. The agency also affirmed short-term foreign currency IDR of the bank at 'B', viability rating at 'b-', support rating at '3', support rating floor at 'BB'.
Fitch believes that the equity injection should - and cash receipts from any further loan sale could - support the bank's liquidity position.
The IBA was founded in January 1992. Azerbaijan's Finance Ministry holds 54.96 percent of shares in the IBA capital. It is expected that the Azerbaijani Ministry of Finance's stake in the country's international bank will increase to above 80 percent in the result of the planned 500 million manats' equity injection.