Azerbaijani Agricultural Bank Privatization Scheme Specified

Azerbaijan, Baku, 20 September / Trend corr. E.Ismayilov/Some 50% capital of the non-bank credit Agrarian-credit organization are planned to sell to foreign investors after re-organization of the organization into the agricultural bank, Mammad Musayev, Chairman of the Board of Agrarian-credit, said.

"At present, we have worked out a list of 20 European banks with whom we are planning to negotiate to attract into the agrarian bank shareholders," said Musayev.

The rest share holding (50%) will be distributed amongst local private sector and state, each will have 25%. Musayev said that the state share in the bank will be privatized

Elman Rustamov, Chairman of the Board of the National Bank of Azerbaijan (NBA), said earlier that the European Bank for Reconstruction and Development (EBRD) has already approved its decision to purchase the package of 25% + 1 share in the established agricultural bank on the ground of the Agrarian-credit. However, the official decision from EBRD is expected after establishment of the agrarian bank that depends on the Government.

The International Financial Corporation and German KfW development bank showed interest in shareholding in the agricultural bank. The consultations with these banks are still continued, and each bank may be suggested 10-15% shares.

At present, the credit organization is operating on the ground of limited license. The Azerbaijani Government will capitalize the Agrarian-sector before privatization, like it did with the International Bank of Azerbaijan and Kapital Bank. Some AZN1mln is invested into the state budget to promote increasing capital in the credit organization.

The organization's current capital touches AZN 18.5mln after AZN 6.3mln was invested at the expenses of the state budget for 2007. The assets of Agrarian-sector are AZN25mln and the credit portfolio - AZN15mln. Organization plans to increase portfolio to AZN17mln until the end of the year. The organization's indexes climbed up insignificantly due to limited possibilities on funds attraction.

The Government is interested in development of the agrarian sector. The agrarian sector needs in $1.2-1.3bln and therefore, understands inevitability to establish the agricultural bank.

The main shareholders of the Agrarian-sector stand the Azerbaijani Finance Ministry (99.9%), as well as Azarsigorta and Land-reclamation and water industry OJSC.

The correspondent can be contacted at: [email protected]

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