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| UniBank HousingFinance |
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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 | 25911 |
| Company name | UniBank |
| Country | Azerbaijan |
| Sector | Finance & Insurance |
| Environmental category | C |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | December 13, 2007 |
| Projected board date | January 15, 2008 |
| Previous Events | Invested: June 23, 2008
Signed: March 29, 2008
Approved: March 25, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
IFC is launching an Azerbaijan Housing Finance Program, designed to facilitate the development of Azerbaijan’s mortgage sector and to increase access to funding. The program would include providing long-term mortgage facilities to selected commercial banks as well as advisory services to the participating banks and other key market players.
The proposed transaction with Unibank Commercial Bank Open Joint-Stock Company (the Bank or Unibank) is the first investment under the program and consists of a seven-year senior loan for up to $15.0 million for the purpose of originating mortgages. |
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| Project sponsor and major shareholders of project company |
| UniBank is an existing client of IFC and is one of the leading private commercial banks in Azerbaijan, with total assets of $375.0 million and equity of $45.0 million as of end-September, 2007. With an expanding branch network in the country, UniBank services the financial needs of small businesses, middle size companies and individual customers. The main shareholders of the Bank are: Mr. Eldar Garibov, Mr. Igor Yakovenko, Mr. Emin Guliyev, EBRD and DEG. |
| Total project cost and amount and nature of IFC's investment |
| The proposed IFC investment is a mortgage facility in the amount of $15.0 million in the form of an A loan for the IFC’s account. |
| Location of project and description of site |
| UniBank is headquartered in Baku, Azerbaijan, and operates a branch network in various locations in the capital city and in the country. |
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| Anticipated development impact of the project |
IFC’s investment is expected to have a high developmental impact in the following areas:
- Development of Azerbaijan’s housing finance sector:
Consistent with the IFC’s strategy, the project presents the opportunity to promote the development of the primary mortgage market in Azerbaijan by:
- providing the much needed long-term funding to the banking system;
- raising the mortgage underwriting standards in accordance with the best industry practices;
- increasing standardization of mortgage files, documentation, and quality.
Furthermore, the project would enable the Bank (and potentially other players) to build a pool of suitable assets for securitization, which would create conditions for the development of secondary mortgage market and potential refinancing mechanisms.
- Increased Access to Funding:
By providing long term funding, the project will also increase the affordability of home purchase, thus promoting home ownership in the country, as well as providing financing for houses renovation. Furthermore, by developing the mortgage market in Azerbaijan, the project is expected to lower the cost of mortgage loans over the short to medium term.
- Strengthening of the Financial Sector:
The successful implementation of this project will develop financial intermediation by increasing the range of products and services available in the market.
- Demonstration Effect:
IFC’s involvement will help bring credibility to the country’s growing mortgage finance sector and will facilitate attracting long-term funding from other sources. |
| IFC's expected development contribution |
The proposed project fits well with the strategic objectives of IFC and the World Bank Group as it will support the development of the housing finance sector and increase the financial intermediation in the economy.
IFC’s developmental contribution is two-prong: - IFC's growing and successful experience in the housing finance sector will ensure that the best international housing finance practices are incorporated;
- IFC’s longer term funding will extend the maturity of the mortgage loans available in Azerbaijan and will further stabilize and diversify the funding base of the country’s financial sector. |
| Environmental and social issues - Category C |
| This project entails IFC support for the business of mortgage finance and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. No further review is required. |
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| For inquiries about the project, contact: |
Natalya Golumb, International Relations
UniBank Commercial Bank Open Joint Stock Company
Rashid Behbudov Street 57
Baku, AZ1022
Azerbaijan
Telephone: (994-12) 498-2244
Fax: (994-12) 980-953 |
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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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