Terms of signing third KfW loan agreement under agricultural project in Azerbaijan defined

Business Materials 11 July 2011 17:42 (UTC +04:00)

Azerbaijan, Baku, July 11 / Trend I.Khalilova /

The German Development Bank KfW plans to conclude a loan agreement with the Azerbaijani Turanbank in late September under the second phase of the Rural Areas Agro-Financing Project in Azerbaijan, the KfW Baku Office reported on Monday.

"Turanbank will be granted a subordinated loan for credit projects in rural areas, including small business development in the regions (excluding Baku, Sumgait and Ganja)," the office said.

The loan amount to be defined by KfW may be in the range of 1.5-2 million euros. Other credit institutions, Bank Respublika and non-banking credit organization CredAgro, were selected in the first phase of the project. Bank Respublika has received 1.5 million euros and CredAgro - 2 million euros.

Preliminary talks were held with Turanbank from July 3 to July 9 during KfW Financial Projects Manager Gerald Huebner's visit to Baku.

Basic requirements for the selection of pretenders for a loan under this project "include developed network of regional branches, trained personnel, etc.

The bank plans to provide the country 3 million euros to finance the second phase.
The cost of the first phase of the project is 5 million euros, of which 3.5 million euros has already been allocated. The remaining funds were intended for another bank.

Negotiations were also conducted with Demirbank, but they were suspended. The bank also considered ParaBank for the loan, but eventually selected Turanbank instead, which will receive credit during the second phase of the project.

Funds under the second phase of the project, like that assigned under the first phase, will be assigned as subordinated loans. Though such loans are provided as second-level capital, they will be designed to finance the regions' rural population.

The terms of the loans are similar to that of the financing of banks through the Germany-Azerbaijani Fund.
Turanbank was established in 1992. It has 25 shareholders, including 5 legal entities (21.8 percent) and 20 physical persons (78.2 percent).