Azerbaijani bank plans to enter Islamic banking market in neighboring countries

Azerbaijan, Baku, May 10 / Trend A.Akhundov /

The International Bank of Azerbaijan (IBA) intends to enter markets of the neighboring countries with its own Islamic banking products, the IBA chairman of board Jahangir Hajiyev said in an interview with The business year.

"For the first time in Azerbaijan's history, we are planning to establish a new office in the field (Islamic banking), enabling the country to become a regional center for Islamic financing. This decision was made bearing in mind the favorable geopolitical situation of the country and the availability of the markets in neighboring countries, such as Russia and Kazakhstan. There are also many opportunities to enter other markets. IBA has expressed its desire to host the Annual Caspian Forum on Islamic Banking. Thus, Baku may also become a center for the development of new tools to attract Islamic financing," Hajiyev said.

Azerbaijan has great potential for the development of this market, Hajiyev told Trend on Thursday.

"Prospects are very large, since this market has not been mastered by the Azerbaijani banks. It needs to be developed. In this segment there is a huge number of products, and there are many tools that we can attract. Now we actually stand aside from this," Hajiyev said.

In the future, the IBA plans to provide Islamic banking in the countries where it has subsidiaries, the first deputy chairman of the IBA, Emil Mustafayev, told Trend earlier.

"At present, the draft decision on the opening of the Department of Islamic banking and Regulations of the new structure are presented for approval by the board of the bank. After review and approval of these documents by the IBA Board an order on the opening of a separate structure and Regulations of the new department will be presented to the Supervisory Board for further approval," Mustafayev said.

He noted that these activities will be completed in a short time. A consortium of companies Salans, KPMG, Pinsent Masons and the Dar al Shariah assists in the creation of specialized structures for the provision of products and services of Islamic banking of the IBA.

International Bank of Azerbaijan was the first among foreign banks to open its representative office not in Dubai free economic zone, but the general market. The IBA future plans include the conversion of an office in the UAE into a branch.

The IBA two offices in London (since 2002) and Frankfurt-am-Main (since 2005) in early 2008 were joined by an office in Luxembourg, and on July 31, 2008 IBA was the first among Azerbaijani banks to receive permission of the Board of Directors of the U.S. Federal Reserve to open an office in New York.

The subsidiary bank in Qatar will be the third subsidiary of the IBA financial group. The first bank, IBA-Moscow, began operations in 2002. Today it has already established itself as a financial institution with 12 offices and branches in Moscow, St. Petersburg and Yekaterinburg. In November 2006 the IBA established its second subsidiary bank outside Azerbaijan - IBA-Georgia.

International Bank of Azerbaijan was established in 1992 as the successor of the Azerbaijan branch of "Vnesheconombank". IBA holds a dominant position in the country's banking sector. The state share in charter capital of the bank is 50.2 per cent, the remaining shares are distributed among private legal entities and individuals.

The official exchange rate is 0.786 AZN to $1 on May 10.

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