Recovery of Azerbaijan’s International Bank to end in 2017 (UPDATE)

Business Materials 4 November 2016 16:47 (UTC +04:00)
The Azerbaijani government works on narrowing of assets of the International Bank of Azerbaijan (IBA).

Details added (first version posted 13:06)

Baku, Azerbaijan, Nov. 4

By Azad Hasanli – Trend:

The Azerbaijani government works on narrowing of assets of the International Bank of Azerbaijan (IBA), Rufat Aslanli, chairman of the Board of Directors of the Chamber, told reporters Nov. 4 in Baku.

“We have a close contact with the government as part of the bank’s recovery. Currently, the process of reducing is underway, and the IBA assets are being gradually transferred to other market participants,” noted Aslanli. “This work must continue in 2017 and I am confident that the bank's recovery process will be completed the next year.”

As a regulator, the Chamber wants only private banks to remain on the market, Aslanli added.

The International Bank of Azerbaijan was established in January 1992. Azerbaijan’s Finance Ministry, which is the IBA shareholder on behalf of the government, plans to increase its share in the bank’s capital up to 95 percent until the end of 2016.

The ministry has a 51-percent share of the bank’s assets as of late 2014, while the share already reached 85 percent by the end of 2015. After the completion of capital injection until the end of 2016, the government share in the IBA’s assets will be brought to 95 percent.

It is expected that the government will allocate additional $500 million Azerbaijani manats for recapitalization of the IBA. Moreover, the Central Bank of Azerbaijan (CBA) allocated a subordinated debt worth one billion manats for the IBA. Meanwhile, the CBA raised a deposit worth three billion manats with five percent interest per annum from the bank in order to ensure the IBA with fixed income.

According to the International Monetary Fund (IMF), the preliminary joint audit of the CBA and Ministry of Finance showed that the volume of bad assets in the IBA reached seven billion manats (70 percent of all assets). The IBA gave its bad assets worth 2.5 billion manats to Aqrarkredit in late 2015, and transferred the remaining 4.6 billion manats in 2016.