OREANDA-NEWS. December 19, 2007. There was signing ceremony held in Baku by and between the Asian Development Bank (ADB) and International Bank of Azerbaijan on allocation of subordinated credit at the amount of 20 mln. dollars, reported the press-centre of International Bank of Azerbaijan.

In accordance with provisions of the credit contract, funds are allocated to Azeri bank for 8 years term. For first five years the credit rate is determined at the level of 6-months LIBOR+3,85 percents, and following three years at 6-months LIBOR+5,35 percents.

Vagif Akbarov, Chairman of the Board of IBA has estimated this deal as a result of confidence in International Bank of Azerbaijan and entire banking sector of the country.

"Importance of today’s event is that it will be the trigger for our future cooperation with ADB, as IBA plans include the expansion of the long-term international cooperation in the world integration context", - Akbarov said.

According to William Williams, Director of Capital Markets Operations Division, this department works with private sector only and therefore it is a first transaction performed with state bank. Normally other ADB structure operated with banks with state share in their capital.
"Upon long discussions we have agreed to enter into this deal, and this will be the first step for future cooperation, as IBA holds the leading role not only in Azerbaijan and Caucasus, but also in Central Asia. Therefore we are prepared to support its future development", - said Williams.
In his opinion it’s a largest deal in Azerbaijan’s banking sector. With consideration of parameters and capital sizes of other Azeri banks the future credit contract signed will not reach these levels of crediting.

It is a large project executed without state guarantees in banking sector, not only for Azerbaijan, but entire region, making the Asian bank the leader among institutional investors. With consideration of the fact that this credit is intended for introduction into second level capital of IBA, it will allow to increase IBA capitalization. According to IBA deputy chairman, bank has no problems with capital adequacy, therefore the attracted funds in the scale of its assets will not change the situation significantly.

Bank capitalization level exceeds $300 mln. and its charter funds is about $100 mln. Bank assets exceed $3 bln.