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EBRD makes two new loans to Azeri banks
Bank marks the launch of new facility to benefit smaller and micro enterprises
The European Bank for Reconstruction and Development is lending $2 million to
Bank Respublika (BR) and $2 million to UniBank. The loans, for four and five
years respectively, are for on-lending to micro and small enterprise clients
of the two Azeri banks with requirements of between $100 and $100,000 to
further promote the entrepreneurial activities in the country. BR and Unibank
will join Azerdemyrol Bank as the first three banks to be included in the
EBRD’s micro and small lending programme through commercial banks in
Azerbaijan. The EBRD’s program now works with 55 banks in its countries of
operation to provide financial access to smaller borrowers. EBRD will offer
technical cooperation to help the participating banks extend this service
further into the regions and will be co-ordinating this effort with the
German-Azerbaijan Fund.
The loans are part of the Bank’s Azerbaijan Multi-Bank Framework Financing
Facility, which was set up in 1997 with $20 million to provide equity and
senior debt financing to selected private commercial banks in Azerbaijan and
senior debt only to selected public sector commercial banks. In July 2005, the
framework was topped up with another $20 million and its reach extended to
allow existing partner banks to on-lend to smaller and micro-enterprises
(MSEs) as well as to the small- and medium-sized enterprises (SMEs) which have
already benefited.
The facility has allowed the Bank to be one of the very few providers of
mid-term funds for MSEs and SMEs in Azerbaijan.Unibank already offers MSE
loans through five branches and is planning to expand this service to at least
two more branches by the end of 2006. BR is currently offering MSE loans
through seven branches and will open three more branches in two regions.
Azerbaijan is one of seven Early Transition Countries (ETC) in the Bank’s area
of operations. The EBRD’s ETC Initiative, launched in 2004, aims to stimulate
market activity in the Bank’s lowest- income countries of operations by using
a streamlined approach to financing more and smaller projects, mobilising more
investment, and encouraging economic reform. The initiative is part of an
international effort to address poverty. The Bank will accept higher risk in
the projects it finances in the ETCs, while still respecting the principles of
sound banking. The EBRD’s 2005 strategy for Azerbaijan stresses the importance
of engaging with MSEs and SMEs. These offer the greatest opportunities for
creating sustainable employment and prosperity, it says.
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