IFC presents instructions for assessing corporate governance for banks in Azerbaijan
Azerbaijan, Baku, Nov. 26 / Trend A.Akhundov /
The International Finance Corporation (IFC) under the Azerbaijan Corporate Governance Project (ACGP) presented on Friday rules to assess the corporate governance for banks.
ACGP Head Caroline Bright said this instruction will reduce the risks of banks when issuing loans.
"The instruction is based on the IFC methodology of Corporate Governance and agreed to the Azerbaijani legislation," Bright said.
IFC representative Eldar Adilzade said the experience of corporate governance is richer in the banking sector and one of the purposes of this instruction is to transfer this experience to the non-banking sector.
"The instruction offers banks tools to reduce risks by assessing the situation with corporate governance in companies that are customers of banks. Usually, banks when issuing loans pay attention to revenues, expenses and other financial performance of companies. The purpose of this instruction is to show that the situation with corporate governance also affect the risks," Adilzade said.
IFC offers a few alternatives to assess the situation with corporate governance in companies.
"The assessment can be carried out by workers of the banks' credit departments. Also, the bank can create a special department, or draw a third person that has experience in providing similar services," the instruction reads.
To this end, the bank representative should conduct interviews and discussions with managers, directors and shareholders, as well as get acquainted with the necessary documents. A report that will be used in risk assessment should be drawn up following the assessment.
Bright said the instruction will also be presented in the banks.
"After Azerbaijan, this tool will be applied in other countries, where IFC operate," Bright said.
The ACGP works to improve corporate governance practices in Azerbaijan. Funded by the Swiss Governments' State Secretariat for Economic Affairs and implemented by International Finance Corporation (IFC), the Project has been helping local companies and banks to enhance operations and increase their ability to attract financing and investment.
The organization is working with government agencies to improve the rules in this area to strengthen national standards of corporate governance in Azerbaijan. The project collaborates with educational institutions, helping them to develop a training course on corporate governance. There are also conducted public awareness campaigns about the benefits of corporate governance.