The European Bank for Reconstruction and Development (EBRD) is leading the first international syndicate to lend US$5mn to a private bank in Azerbaijan, as part of efforts to encourage the Caspian seaside nation to foster competition in the banking sector and to further diversify the non-oil sector of its economy.
The EBRD is directly lending UniBank, one of Azerbaijan’s largest private sector banks, US$1.5mn over three years. Anglo Romanian Bank and Bank Austria Creditanstalt will provide US$3.5mn, for one year, with a one-year extension option. UniBank will use the proceeds of the loan to expand lending to private corporate customers, including smaller businesses.
UniBank, formed from a merger in 2002, has been 20% owned by the EBRD since 2003 and has one of the most developed corporate governance practices in the country. While Azerbaijan’s banking sector is still dominated by state-owned banks, which control more than 60% of banking assets, competition in the sector is increasing.
UniBank has created a niche for itself through an operational focus on lending to small and medium-sized regional companies. With existing branches in Baku, the port capital, and the economically important inland city of Gyanja, which straddles trade routes across the Caucasus region – and with plans to open two further regional branches this year – it is well placed to expand these operations.