Int'l Bank of Azerbaijan continues to clean up toxic assets

Business Materials 14 November 2016 11:27 (UTC +04:00)

Baku, Azerbaijan, Nov. 14

By Azad Hasanli – Trend:

The International Bank of Azerbaijan plans to start the second stage of its toxic assets transfer to Aqrarkredit CJSC, a non-banking credit organization, in the second half of 2016 or the first half of 2017, according to the bank’s financial report for the first half of 2016, posted on its website.

The first stage of the toxic assets transfer program has been successfully completed, the report said.

The International Bank of Azerbaijan has transferred assets worth 9.93 billion manats to Aqrarkredit CJSC and so far [as of June 30] has obtained net assets worth 5.6 billion manats in exchange for them, the report noted.

In July 2016, the bank received another 2.8 billion manats, according to the report.

The International Bank of Azerbaijan is currently discussing the second stage of its toxic assets transfer with Aqrarkredit CJSC, the report said.

The entire volume of the toxic assets will be transferred to the non-banking credit organization until late 2017, reads the report.

On July 15, 2015 the President of Azerbaijan Ilham Aliyev has signed a decree on the measures for rehabilitation related to the preparations for privatizing the state-owned shares of the International Bank of Azerbaijan JSC.

The shortcomings in the management, investment and loan policy of the International Bank of Azerbaijan in recent years, as well as financing of less efficient, risky investment projects worsened the bank's financial state, caused increase in the share of distressed assets and reduced its liquidity, said the decree.

In order to overcome the current situation, restore the bank's financial position and ensure its sustainability, the distressed assets of the bank were transferred to the state-owned Aqrarkredit CJSC non-banking credit organization. Bonds for three billion manat were issued under the state guarantee to ensure IBA's liquidity instead.

Aqrarkredit CJSC is the biggest non-banking credit organization operating since 2001, whose shares are owned by the state.

The International Bank of Azerbaijan was founded in 1992 and is the largest bank of the country. Some 54.96 percent of stake in the bank's capital is owned by the state.