Today.Az » Business » Asker Mamedov: "There are huge objectives set before the International Bank"
01 May 2006 [14:23] - Today.Az
Exclusive interview of Day.Az with Asker Mamedov, Deputy Chairman of the Board of the International Bank of Azerbaijan.
- Mr. Mamedov, interest of international financial institutions to IBA growth every year. What attracts such large and serious entities in IBA?
- I think it is not a secret that the International Bank of Azerbaijan by all indication is number one bank in Azerbaijan, which is evidenced by performance indicators of previous years and current pace of bank development.
IBA parameters allow foreign banks, or more precisely, risk management structures of these financial institutions accept risks of our Bank via provided fund limits for implementation of various operations.
Cooperation between these banks and IBA covers various areas of banking activity, such as funding of trade operations, project finance, as well as small and middle-sized business finance (SME).
- What is meant by project finance?
- By classic definition ?Project finance is the form of finance intended for dedicated project, with following characteristics:
a) the source for payments is the cash flow generated mainly (sometimes solely) by project itself;
b) credit is secured by project related assets, including contracts under the project;
c) the provision of Business Plan (Feasibility Study) plays a significant role, which is undoubtedly the Bank requirement, in turn defining the level of seriousness of customer approach to the project itself;
d) finally, potential debtor shall be the customer of International Bank of Azerbaijan
For the projects to which the finance is applied, two or three sponsors (i.e. shareholders) establish the special purpose company (SPC), which owns project assets and carries all liabilities under the project, including payments on credit.
- What are financial institutions most actively involved with IBA currently?
- Over last ten years Bank has participated in funding of large projects of state significance.
Among these projects can be mentioned purchasing of 2 Boeing aircrafts by AZAl state company, refurbishment of airport named after H. Aliyev, reconstruction and equipping of Central Clinic Hospital, procurement and installation of ??-300 units for Azerkhimya State Concern (Ethylene-Propylene Production Plant) etc.
Funding of these strategic state projects under state guarantees was performed by large international financial institutions such as Barclays, NatWest, Nichimen, AKA Bank, Turkeximbank with attraction of agencies on insurance of export credits (?‘? USEXIM, ECGD, Euler-Hermes. In the project finance structure of these projects IBA, as local banking institutions acted as agent bank along with large creditors.
IBA is also active in funding of small and middle-sized enterprise (SME) financing. For performance of these projects IBA has attracted credit lines of large international financial structures, motivating development and reconstruction in various countries, such as Islamic Corporation for Development of Private Sector of the Islamic Development Bank (ICR) and Black Sea Trade and Development Bank (BTDB).
For example, IBA with direct participation of Black Sea Trade and Development Bank have funded 10.4 mln. EURO project, on construction of various capacity glassware production plant, with total value of 15.4 mln. EURO
We have funded the project at 2 mln. dollars within the credit line of Islamic Corporation for Develoment of the Islamic Development Bank, stipulating production of batteries of various size, with total value of 4 mln. dollars USA, as well as project on modernization of furniture production at the credit of 2.5 mln. dollars USA, at total project value of about 5 mln. dollars USA.
IBA has also provided financing for reconstruction of several plants on production of construction materials, diary products, low capacity power stations etc.
We shall note that Bank?s cooperation with international finance institutions and large banks is fruitful. First, credit lines provided by these financial institutions have been provided without state guarantees financing for various non-petroleum sectors of economy. Second, Bank has gained the work experience with such entities and implemented international standards to its work practices.
Just considering this experience and growing needs of business, IBA over the last years have activated its activities on attraction of credit lines of international finance institutions, such as Commerzbank, Societe Generale, JBIC, Bayerische Landesnabk, AKA, Bankgeselschaftberlin, Credit Suisse, UBS, Sumitomo Mitsui Banking Corporation under guarantees of export and import agencies such as USEXIM, Euler-Hermes, COFACE, SACE etc. Using these lines, local companies may at relatively low interest rates procure for on long-term basis equipment and materials from American, European or Asian suppliers.
For efficient and quick resolution of problems related with project finance IBA actively uses its representations in European countries. Thus, huge work on coordination of works on attraction and use of credit lines is performed by Frankfurt representation of the Bank is Germany and London representation in UK. This justifies integration of our Bank with large banks of Europe.
- How successful?
- Numbers indicate it: by March 31, 2006 the total amount of investment to country?s economy via funding attracted by the Bank is AZN 63.3 mln.
- Are state guarantees required for credit lines issued to the Bank?
- No. Guarantees are provided by financial indicators, IBA?s international status and rating. I shall note that IBA is the only Bank in Azerbaijan with long-term ?BB-? rating.
Besides, multiple awarding of the bank as ?Best Bank of Azerbaijan?, ?Azerbaijan?s Bank of Year?, ?Best bank of world?s developing markets? for Asia describe the attitude of international community towards us.
- What can be demonstrated as example of high credibility of financial institutions towards the International Bank of Azerbaijan?
- Undoubtedly, Bank?s name is its calling card all over the world, Bank capabilities and business abilities tell much. Example of high credibility can be the allocation of syndicated credit for the amount of 56 mln. USD without government guarantees. Syndicate participants included such giants as Citigroup (USA) and Commerzbank (Germany), as well as about 18 banks from 10 different countries of various continents.
- What are future plans? Any new crediting lines planned for attraction?
- Bank continues its active expansion to international markets. Opening of branches of subsidiary bank ?International Bank of Azerbaijan?Moscow?, achievements of London and Frankfurt representations speak of bank?s intention not to stop on achieved.
There will new credit lines with more privileged terms and conditions for local businessmen. The International Bank of Azerbaijan is a Bank of National Development and there are huge objectives set before us for the improvement of banking sector of the country and upgrading of financial environment in internal crediting market.