Universal Private Agrarian Bank to be Established in Azerbaijan not Earlier than 2009

Business Materials 26 August 2008 16:36 (UTC +04:00)

Azerbaijan, Baku, 26 August/ Trend , I. Khalilova/ The Azerbaijani government plans to establish universal private agrarian bank which will offer services to agriculture and agro-industry ventures, in 2009 to 2010, says the State Program on Reliable Provision of Population with Foodstuffs in 2008-2015 approved by President on 25 August.

The bank will finance all cycle of agricultural production from irrigation to establishing of sale network.

"Today there is a need in Azerbaijan to establish a bank for financing of agriculture," a source in the National Bank of Azerbaijan said. "It would be expedient to use current infrastructure by updating it, but this decision depends on government," a source said.

At present Agrar-kredit non-bank credit organization is functioning in Azerbaijan which has appealed NBA to change its status into agricultural bank.

The European Bank for Reconstruction and Development, International Finance Corporation and German Development Bank KfW have stated they are interested in holding shares in the agricultural bank. They are holding talks not only with NBA, but also Agrar-kredit. EBRD intends to hold 25% of shares in the agricultural bank.

EBRD has experience in holding shares together with KfW.

NBA will consider proposals of these financial institutes and has not yet determined their shares. Besides, the measures to change the status of Agrar-kredit is still going on, but the key shareholder - Ministry of Finance has not yet asked to grant complete bank guarantee.

The key shareholder of Agrar-kredit is the Ministry of Finance of Azerbaijan with 99.9% of shares and the remaining part is equally distributed among state-owned insurance company Azersigorta and Melioration and Water Supply OJSC.

The other measures are expected to secure bank's granting micro loans, improving mechanism of encouraging financing of grain producers and others.

The government is interested in the development of agriculture which needs financial resources worth $1.2bln-$1.3bln.

Current rate for 26 August is 0.8141 AZN/USD.

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