OREANDA-NEWS On 08 October IFC, a member of the World Bank Group, announced it will invest USD 20 mln in Bank Respublika (BR), Azerbaijan’s fourth-largest private sector bank, to help increase lending to micro, small, and medium businesses in the country’s rural areas.

Bank Respublika aims to more than double its lending to small businesses, and expects half of its loans to be in rural areas of Azerbaijan where there is significant unmet demand for financing.  IFC’s senior loan to the bank will support these goals.

At the signing in Istanbul before the 2009 Annual Meetings of the World Bank Group and International Monetary Fund, Khadija Hasanova, Bank Respublika’s CEO said, “We welcome and appreciate IFC’s long-term support and partnership. This financing will support our strategy to expand outside Baku to help meet the financing needs of smaller enterprises.”

Jyrki Koskelo, IFC Vice President for Europe, Central Asia, Latin America and the Caribbean, and Global Financial Markets and Funds, said, “Small businesses and the poor are most vulnerable in an economic downturn.  As we work to ensure that finance continues to reach the people and places where it’s needed most in the Europe and Central Asia region, we are pleased to partner with strong and well-managed institutions like Bank Respublika.”

This latest IFC investment in Bank Respublika builds on an existing relationship. In 2007, IFC provided Bank Respublika with a USD 5 million senior loan. The bank also participates in IFC’s Global Trade Finance Program as an issuing bank with a USD 10 million trade finance line from IFC.

Shahbaz Mavaddat, IFC Director for the Southern Europe and Central Asia region, said, “This new transaction with Bank Respublika is closely aligned with our priorities in the region to provide financing to small businesses, to stimulate growth in rural areas where the poverty rate is highest, and to work with leading local banks to strengthen the financial sector.”

IFC’s strategy in Azerbaijan is to support diversification of the private sector, including the financial and real sectors, infrastructure, health, and education, through a combination of investment and advisory services. Since 1995, IFC has provided more than USD 300 million in financing for Azerbaijan.