Azerbaijan, Baku / Trend I. Khalilova / On 14 December, the Asian Development Bank (ADB) and the International Bank of Azerbaijan (IBA) signed an agreement in Baku, on the allocation of a subordinated credit totalling $20mln. According to the credit agreement, the funds will be allocated to the IBA for 8 years. Within the first 5 years the interest rate will be 6-month libor+3.85%, and within the next 3 years -6-month libor+5.35%.
Vagif Akbarov, the Deputy Chairman of the Managing Board of the IBA, assessed the deal as a result of the trust between the IBA and the entire banking sector of the country.
"Today's event is an important one because it will give an impetus to the further cooperation with ADB, as the IBA's plans to include an enhancement of the international long-term cooperation in the terms of the integration in the world system," Akbarov said.
According to William Williams, the Director of the Dab's Department on the Capital Market Transactions, the Department is working exclusively with the private sector, therefore it is for the first time, the bank has implemented a transaction with a state bank. Usually, another department at the ABD works with the banks having a state share.
"After the long discussions we agreed to strike a deal and that will be the first step for our further cooperation, as IBA takes a leading role not only in Azerbaijan and Caucasus, but also in the Central Asia. Therefore, we are ready to assist the bank in its development," Williams said. According to Williams, this will be the largest deal in the Azerbaijan banking system. Taking into the account the parameters and the amount of the capitals of other Azerbaijani banks, the credit agreements to be signed in future, will not achieve this figure.
This is a great project to be implemented, without the state guarantees in the banking sector not only of Azerbaijan, but of the entire region, which will put forward the Asian Development Bank for the leadership amongst the institutional investors. Given the fact that the credit is intended for the second level capital of the IBA, it will enable the enhancement of the capitalization of the IBA. According Akbarov, the bank has no problems with the adequacy of its capital, and therefore, the funds to be drawn will not drastically change the situation. The bank's capitalization exceeds $300mln and its authorized capital totals $100mln. The assets of the IBA exceed $3bln.