KfW defines third bank for agro-loaning in Azerbaijan

Business Materials 14 January 2011 19:04 (UTC +04:00)

Azerbaijan, Baku, Jan. 14 / Trend I.Khalilov /

The Azerbaijani Bank of Baku may receive the third loan allocated by the German development bank KfW under the project on agro-loaning of rural areas in Azerbaijan, the KfW Baku office said on Friday.

"The Bank of Baku has already passed assessment and today out of all the banks, Bank of Baku it is the most potential candidate for the KfW loan of $ 1.5 million euro," the organization said.

Previously, Demirbank claimed to obtain these funds, but despite the fact that this bank was given technical assistance, it was denied a loan because of inadequacies to KfW terms on agricultural lending. Among the requirements of the German bank is distinguished a developed branch network in regions of the country, trained personnel, etc.

Signing of a contract with Bank of Baku is expected during Manager for financial projects of KfW Herald Xubner's visit to Azerbaijan in late February - early March.

The first phase was valued at 5 million euros, which included lending and technical assistance. Sheki-Zagatal and Gakh will be covered at the first stage.

Loans were distributed between two credit agencies - Bank Respublika and non-banks credit organization CredAgro. Bank Respublika received 1.5 million euro, while 2 million has been allocated to CredAgro. The rest of this sum is to be allocated for аnother bank.

Terms of loans will be similar to terms of financing of banks via German-Azerbaijani fund.

The first agreement was signed with CredAgro. CredAgro specializes in its activity on agro-financing, in difference to banks. CredAgro was established in 2000 by the international humanitarian organization ACDI/VOCA. The authorized capital of the organization hits $5,000, but joint capital - 7 million manat.

Presently, CredAgro is oriented on financing of projects in regions and covers 27 regions. It established 9 representations and has supporting offices. Spheres of loaning include agricultural loaning, financing of trade operations, infrastructure, leasing, and consumer loaning except for mortgage.

Bank Respublika started operating in 1992. The bank has 34 branches and units in Baku and the regions.

The shareholders are two large German financial institutions DEG and SIDT, a member of Sparkassen-Finanzgruppe, with a Bank Respublika share package of 25 percent + 1 share.

Bank of Baku was established in 2005 by the merger of two local private banks - OAO "Bank of Baku" and KB "IlkBank". Currently, 40 percent of the bank's shares belong to a Turkish group of companies NAB, 10 percent - Elchin Isayev (Chairman of the Supervisory Board), over 29 percent - Azpetrol and about 21 percent owned by an individual and the company AzInvest.

In general, the bank operated from Feb. 14, 1994 under the name Commercial Bank Tugay, which on Feb. 10, 1997 was renamed the Commercial Bank "Bank of Baku". The bank has 16 branches in the capital and regions.

DemirBank (formerly AzerDemiryolBank) has operated in Azerbaijan since October 1989. DemirBank developed within 18 years and strengthened its position on the Azerbaijani bank market. Its shareholders include large international financial institutions, such as the European Bank for Reconstruction and Development, and the Netherlands Development Finance Company, with a DemirBank share of 35 percent. Since December 2005, EBRD has acquired 25 percent +1 share in the bank. Presently, AzerDemiryolBank OJSC has 32 branches and departments covering Baku and regions.