The European Bank for Reconstruction and Development (EBRD) is further extending its support for Azerbaijan’s leading private banks by signing loan agreements with four of its five banking partners in the country.

The deals – a US$5mn credit line to Azerdemiryolbank and a US$4.5mn line to Bank of Baku to benefit micro, small and medium sized enterprises, and two US$2mn credit lines to Bank Respublika and Unibank respectively to benefit small and medium sized enterprises – have been signed.

The EBRD has since 1998 been encouraging Azerbaijani banks to finance smaller enterprises. Its partners so far have been the four banks signing deals in London and a fifth, Azerigazbank (which signed a separate US$2mn credit line agreement in April to benefit micro small and medium-sized enterprises). Complementing their services to small businesses, these five banks also benefit from EBRD’s Trade Facilitation Programme.

As smaller businesses develop, in line with Azerbaijan’s overall economy, the local banks “business volumes are increasing. Yet the EBRD remains one of the few potential providers of longer-term finance from international markets. Between 2002 and 2005, the EBRD’s five partner banks, which focus on supporting small and medium-sized businesses, received 11 credit lines worth a total of US$18.85mn, which they used to finance 66 sub-projects in the manufacturing, trade and services sectors.

The latest agreements bring the total made available to these five banking partners to US$37.35mn, including SME lending, a syndicated loan and two equity investments.