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EBRD works with local Azeri banks to support SMEs
$3.5 million to benefit businesses, promote competition
The EBRD is lending two private banks in Azerbaijan a total of $3.5 million to
enable small and medium-sized enterprises (SMEs) to gain access to more
finance to build or expand existing businesses.
Azerigazbank will use a $1.5 million loan to on-lend to SMEs, while Bank
Respublika will receive $2 million for the same purpose. These loans build on
previous EBRD cooperation with both banks. In 2004 Azerigazbank received $2
million and Bank Respublika received $1 million to support SMEs. Earlier this
year, the Bank also doubled an existing loan to Azerigazbank to $2 million
used specifically to promote trade, while a similar facility for Bank
Respublika doubled to $1 million.
Kurt Geiger, EBRD Business Group Director for Financial Institutions, said
SMEs are the grass-roots for economic development, and the Bank is happy to
support local banks working to strengthen this sector. Additionally, by
working with local private banks in Azerbaijan the EBRD is promoting
competition that will benefit the banking sector as well as clients, said Mr
Geiger.
The lack of competitiveness within the country’s banking sector, together with
its serious undercapitalisation, could have serious long-term consequences on
the economic development prospects of the Azerbaijan economy. The EBRD
therefore continues to actively work with local private sector banks - through
loans, equity and technical assistance - to boost competition and provide more
liquidity in the sector.
The EBRD is one of the largest investors in Azerbaijan, having committed more
than €574 million in the country.
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