Azerbaijan, Baku, Feb.4 / Trend corr I. Khalilova / A selection process of Azerbaijani banks to activate Loan Guarantee Fund (LGF) was launched, technical manager of the German-Azerbaijani Fund (GAF), through which the LGF will operate, Andreas Franke said on Feb.4.
German development bank KfW proposed to choose the GAF partners as agent banks, credits of which will be guaranteed through LGF, but Franke said that the list of the banks of the GAF will be limited due to the world crisis.
"Thus, two banks in the worse case and three banks in the best case will be involved in the fund," the manager of the GAF said.
Head of the Baku office of the KfW Natig Abdullayev said that the preference will be given to partner banks of the GAF which include Bank of Baku, Bank Respublika, UniBank, Para Bank, Azerdemiryolbank, AGbank, Rabitabank, MuganBank and Nikoil Bank.
The fund intends to guarantee loans, attracted by Azerbaijani banks in international markets under the KfW lending, having AAA+ rate.
"Taking into account the rate of the German bank, the more guarantees from the LGF, the more opportunity will be available to attract foreign borrowings.
The global crisis caused the rise of cost of foreign banks' lending resources which finance progressive markets. Therefore, local banks limited the lending amount in August 2008. Some of them even entirely suspended lending services.
The KfW rendered Azerbaijan 4 million euro for the establishment of the fund, 3.75 million of which will be as guarantees and 0.25 million as payments to consultant.
In August 2008, KfW signed a contract with Azerbaijan's Ministry of Economic Development on beginning the activity of a consultant of the Savings Banks Foundation for International Cooperation (SBFIC) of Germany as a manager.
The fund should cooperate as a accounting account in the KfW headquarters. The consultant will monitor Azerbaijani banks and act as a guarantee before the KfW.
In the first stage, the amount of the fund will make up 2.3 million euro. The LGF is not limited in involving banks but the guarantee amount in the first stage will not exceed 500,000 euro. The banks involved by the KfW can't render loan more than 150,000 euro.
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