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| Bank Respublika |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 25047 |
| Company name | JSC Bank Respublika |
| Country | Azerbaijan |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | November 21, 2006 |
| Projected board date | December 21, 2006 |
| Previous Events | Invested: May 3, 2007
Signed: March 9, 2007
Approved: January 29, 2007 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Respublika Bank (Respublika or the Bank) of is one of the leading private and independent banks in Azerbaijan providing services primarily to Small and Medium Enterprises (SMEs), local entrepreneurs and individuals. Respublika was established in 1992 as a private commercial joint-stock bank. Since 2002, the Bank has made a strategic decision aimed at aggressive growth and cooperation with international institutions. Respublika is ranked among the top ten banks in Azerbaijan in terms of assets, size of loan portfolio, deposits and profitability. The Bank is managed by a new dynamic management team. Its longer term strategy is focused on becoming a leader in SMEs and retail business with an extensive branch network and a stable customer base.
To support the Bank’s growth, IFC is considering investment in Respublika. The proposed transaction consists of:
- a senior loan of up to $4.5 million, and
- an equity investment of up to $1.5 million.
The proposed loan will have a maturity of five years with a two year grace period for principal repayment and will be used to on-lend to SMEs. The investment will be supplemented by technical assistance to contribute to the institutional capacity building of the Bank and improve such areas as corporate governance, risk management and internal audit. |
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| Project sponsor and major shareholders of project company |
| The Bank is controlled by two main groups of shareholders: DEG/SIDT alliance (25%+1) and Gouliyev family (collectively 73%). The two main representatives of the Gouliyev family in the Bank are Natig Saday oglu Gouliyev and Elchin Saday oglu Gouliyev. Mr. Elchin Gouliyev is a Chairman of the Supervisory Board of the Bank. |
| Total project cost and amount and nature of IFC's investment |
The estimated total amount of IFC’s proposed investment is up to $6 million, which would include:
- a loan for IFC’s own account of up to $4.5 million; and
- an equity investment of up to $1.5 million. |
| Location of project and description of site |
| The Bank operates in the Republic of Azerbaijan and is headquartered in the capital city of Baku. The Bank has 10 branches, 7 in Baku and three outside of Baku (Ganja, Yevlakh and Guba). The Bank is currently constructing 3 more Baku branches and two new branches in other urban areas (Sumgayit, Lenkeran). |
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| Anticipated development impact of the project |
| The proposed project is expected to have development impact on the financial and SMEs sectors in Azerbaijan. The project would strengthen the financial position and corporate governance of the Bank, enabling it to meet the demand for SMEs funding and thus, increasing the competition in the SME lending/leasing market, contributing to development of non-oil sector and economic growth. |
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| IFC's expected development contribution |
| By providing equity and long-term debt funding, which is still scarce in Azerbaijan, IFC would help the Bank to expand its capital base and extend the maturity of its funding sources. This, in turn, would increase the limited financial opportunities for SMEs in the country. In addition, the Technical Assistance from IFC will be targeted to improve the Bank’s corporate governance and risk management practices which would contribute to overall transparency in the banking system and strengthen prudent management practices of the Bank. |
| Environmental and social issues - Category FI |
| This is an FI Type 1 project. Respublika would establish an environmental management system to ensure that investments under relevant operations meet host country environmental, health, and safety requirements and are consistent with IFC’s exclusion list. |
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| For inquiries about the project, contact: |
Ms. Khadija Hasanova, Chairman of the Management Board
Respublika Bank, 21, Khagani Street
AZ1000 Baku, Azerbaijan
Telephone: +99412 598-08-00
Fax: +99412 598-08-80
Website: http://www.bankrespublika.az/ |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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