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Partner banks of German-Azerbaijani Fund not experience liquidity problems

Business Materials 29 August 2009 13:02 (UTC +04:00)

Azerbaijan, Baku, August 29 / Trend I. Khalilova /

German-Azerbaijani Fund (GAF) does not expect to obtain new credit lines from international financial organizations and in the future, will continue funding the banks at the expense of earnings, i.e., revolving accounts, the technical manager of the German-Azerbaijani Fund (GAF), through which the LGF will operate, Andreas Franke said on August 29.

Agreement on the establishment of GAF was signed in 1999, but the credit began to be provided in March 2001 at the expense of German development bank KfW. GAF partners are of Bank of Baku and Unibank (since March 2001), January 2003 - Parabank and Bank Respublika, September 2004 - Azerdemiryolbank and AGbank, December 2006 - Rabita Bank and Mugan Bank, February 2007 - Nikoil Bank.

"The global financial crisis, in general, has not led to changes in the activity of LGF, only because of the reduction in total lending in the banking system of Azerbaijan, in mid 2008 the turnover of the Fund began to fall, said Franke. - But today, the period of the recession has passed."

He said that all partner banks of the Fund restored lending and none of them experiences any problems with liquidity. Today, the maximum limit for a one-time loan from the LGF is €2-2.5 million for each bank.

The turnover in 2009 amounted to €5 million, and in general, throughout the year, this figure reaches usually €8-10 million, and this tendency has been held over the past eight years. The current portfolio of placement from the GAF varies from €11.5 million. By the end of the year, it will not exceed €12 million, Franke said.

The credit resources of other international organizations, issued to banks, can also be used through the Fund, since they pour in their own portfolio. However, today this mechanism has not yet developed, so the possibilities of the GAF are limited by loans of KfW and the EBRD.

Financing by the Fund started in 2001 at the expense of a loan from KfW. The German bank provided two tranches of €8.7 million to GAF. Spending them and the loan of EBRD completed, and therefore, currently the local banks are financed from the revolving account. The European bank joined the financing through GAF within the mechanism of social framework financial services for micro and small enterprises in Azerbaijan (AMBF-MSE) in 2006.

Last year, 4,830 loans totaling €11.5 million were provided through GAF.

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