Moody`s: Privatization of Azerbaijan's largest bank to maintain its dominant status
Azerbaijan, Baku, June 22 / Trend, N.Ismayilova /
International Rating Agency Moody's believes that the privatization of the International Bank of Azerbaijan would be credit positive, the agency said.
According to the agency's report, it would increase IBA's standalone strength and increase transparency, improve corporate governance and bolster capitalisation. The deal will also improve the banking sector's competitive dynamics and strengthen banks' aggregate financial metrics.
The IBA consultants will prepare recommendations on privatization terms and conditions, provide legal and technical assistance, evaluate the government's stake and help IBA attract strategic investors. Azerbaijani branch of PriceWaterhouseCoopers Audit Azerbaycan, Salans UK Limited, Rothschild & CIE Consortium has been selected a consultant providing services to the privatization process in the authorized capital of the International Bank of Azerbaijan (IBA).
"This is likely to be a lengthy project, and we do not expect its completion this year," the agency's report says.
As the largest bank in Azerbaijan, IBA holds the dominant position in the banking sector, accounting for 42 percent of the system assets, 43 percent of loans and 36 percent of deposits, including 24 percent of retail deposits at year-end 2010.
"IBA's dominance would be maintained after privatization since the bank will benefit from greater capital, which will enable it to provide financing to large companies, and access to a wide customer base through its extensive distribution network," the report says.
According to the Moody`s expectations, as a result of issue of shares the bank's capital will be significantly increased.
IBA's main shareholder is the Azerbaijani government, which owns 50.2 percent of the shares; 49.8 percent of shares are owned by private physical and legal entities.