BAKU, AZERBAIJAN, Mar. 27—The International
Finance Corporation (IFC) signed loan agreements today totalling US$1.3
million with Azerdemiryolbank, Azerigazbank and Rabitabank, three of the
largest private banks in Azerbaijan. The IFC credit lines will be
used for on-lending to privately-owned small and medium-sized enterprises
(SMEs) to finance business expansions and modernizations and for working
This is IFC’s first project involving the Azeri banking sector and was
approved under the Extending IFC’s Reach Initiative, a program which supports
investments in the SME sector. A total of US$3.4 million in IFC funds
for SME financing was approved in December 1997 to be extended as medium-term
loans to private Azeri banks.
In addition, the project includes a complementary program of technical
assistance and training to provide know-how to the three participating
banks. The technical assistance program is being carried out by Shorebank
Advisory Services with financing provided by the United States Agency for
International Development (USAID), and is focused on enhancing the banks’
skills in credit evaluation, risk management, and internal controls.
Mr. Khosrow Zamani, Manager in IFC’s Central and Southern Europe Department,
said that the project is expected to stimulate economic activity in a number
of key sectors, including retail and wholesale trade, and in the transport,
construction and construction materials sectors, which provide significant
employment in Azerbaijan. It is also likely that IFC’s involvement
will help to attract other commercial lenders to the Azeri financial sector.
Azeridemiryolbank, established in 1989, is Azerbaijan’s largest private
commercial bank and is an important local source of financing for the transport
sector. Azerigazbank, established in 1992, is primarily active in
the wholesale trade, food products and transport sectors. Rabitabank,
established in 1993, lends to a number of key enterprises in the local
Shorebank Advisory Services is the consulting and advisory arm of Shorebank
Corporation, a US$700 million U.S. bank holding company, which is a leader
in economic development and community-building in the U.S. and internationally.
Shorebank’s international projects include small business financing
and banking sector support initiatives in Poland, Russia, Bulgaria, and
IFC’s activities in Azerbaijan include a combination of technical assistance
and direct investments. In addition to the financial sector, IFC
has also developed projects in the oil pipeline, lubricating oil, and beverage
sectors. Including this project, IFC has to date approved eight investments
totalling US$25.0 million in Azerbaijan. The Corporation has a local
office in Baku and looks forward to increasing the scope of its activities
in the country and elsewhere in the region.
IFC, a member of the World Bank Group, fosters economic growth in the developing
world by financing private sector investments, mobilizing capital in the
international financial markets, and providing technical assistance and
advice to governments and businesses.