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| Description of company and purpose of project |
Azerigazbank (AGB, or the bank) was established in 1992 by the companies of Azerigaz State Concern as a joint-stock investment bank. While AGB was established primarily to provide banking services to the various companies of the state-owned gas sector, it has since diversified its shareholder and customer base. AGB no longer lends to Azerigaz and its affiliated public-sector companies, and is shifting its focus toward retail banking.
In addition to the head office in Baku, Azerigazbank has 103 employees, 25 currency exchange offices, and 5 branches throughout Azerbaijan.
IFC has been approached by Azerigazbank for loan funds to on-lend to small businesses in Azerbaijan. The Bank wishes to increase the provision of financing to small businesses to strengthen the linkages between large oil and gas sector firms, the tourism industry and the small business market. There is currently a major shortage of funds targeted at this segment of the economy.
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| Project sponsor and major shareholders of project company |
AGB was established with 49% share capital from Azerigaz, and 51% private ownership. Successive share capital increases have diluted the public sector interest in AGB to less than 2%. Private individuals owning less than 1% collectively own 40% of the Bank. AGB Chairman Chingiz Asadullayev and his immediate family directly control about 25% of the Bank’s shares; while management and families own about 12%; and its employees about 15%. Other shareholders include the Improtex Trading Group (4%), and Rabitabank (4%).
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| Total project cost and proposed IFC investment |
| The total project cost of the IFC Senior Loan is estimated at $1,200 thousands to be disbursed in two tranches of $600 thousands each. The duration of the loan is 6 years (including 2 year grace). |
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| Location of project and description of site |
| The Bank’s branch operations are concentrated in Baku, Azerbaijan. |
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| Project Development Impact and IFC's Role |
IFC’s experience over a range of micro and small business finance projects has shown that a financial institution whose main focus is small business finance provides an efficient means of reaching the small business target group with initial technical assistance support. Due to the small size of the Bank, streamlined credit evaluation procedures and appropriately tailed MIS and small loan monitoring technologies, can be put in place quickly with the help of on-site technical advisors. High efficiency levels for small business lending are therefore achieved in a relatively short timeframe.
The project is expected to strengthen the financial sector in Azerbaijan, which has an economy of significant gaps in funding for economic activity. In addition, there is potential for the development of small businesses which are directly linked with, and supply to, large companies within Azerbaijan’s oil and gas sectors.
The proposed TA support will make four major contributions to the Bank:
Create systems and procedures for prudent assessment of small business loan applications;
Create a small business development function within the bank to enable ongoing generation of new lending opportunities;
Create and implement a system within the institution to ensure that loans are properly monitored and portfolio risk is adequately controlled;
Implement a training program for branch managers, loan officers and credit analysts to strengthen the credit and risk management capacities of the bank.
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| Environmental and social issues - Category B |
Environmental considerations. Azerigazbank is a category FI Type 1 project according to IFC’s environmental and social review procedure. The Banks must require and use its best efforts to ensure that its small enterprise clients comply with environmental, health and safety, and IFC’s Microfinance Exclusion List requirements on a national and local level. The Bank will also provide IFC with an annual environmental performance report and ensure that adequate number of staff members have been through IFC’s environmental training course.
To view the environmental documents for this project, click here |
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| Location of environmental documents in locally affected community |
The Bank’s headquarters are located in Baku.
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| To contact the project company, please write to: |
Mr. Chingiz Asadullayev,
Chairman of the Supervisory Board
Phone: (994 12) 97 50 17
Fax: (994 12) 98 96 15
16 Landau Street, Baku Azerbaijan
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