Project description
and objectives:
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The proposed project is for the Bank to acquire newly issued shares of Bank of
Baku (BB). BB was formed in February 2005, when two local private banks,
namely Bank of Baku and Ilkbank, merged and consolidated their businesses.
The investment has the following objectives:
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support the consolidation of this newly merged bank and its lending capacity
by strengthening its capital base, supporting the development of its
infrastructure and strengthening the corporate governance;
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provide both management guidance and institutional building through
Supervisory Board participation and technical assistance;
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the consolidation should demonstrate the benefits of such a merger and create
a more efficient intermediary in the financial sector.
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Transition impact:
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The project has a high transition impact because of its restructuring,
demonstrating consolidation and the creation of a financial intermediary with
critical mass in the Azerbaijani banking sector. Following the creation of
Unibank in 2002, where the Bank became a shareholder, this will be a second
merger in the sector and the EBRD’s second equity participation in an existing
local bank in the country.
The Bank's investment and the underlying merger that it supports will have a
positive impact on both BB's own operations and the financial sector it
participates in, recognising that it will:
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Enable BB to increase intermediation and its capacity to finance the private
enterprise sector, particularly SMEs;
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Demonstrate the benefits of merger as a method of strengthening the position
in the market through both increased market share as well as efficiency
improvement; expected to encourage banking sector consolidation among the many
smaller private banks that presently operate in Azerbaijan.
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The client:
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Bank of Baku, an open joint-stock company, was incorporated in February 2005,
when two local private banks merged, creating one of the largest private
banking institutions in Azerbaijan.
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EBRD finance:
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Equity investment of up to USD 5 million.
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Total project cost:
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Up to USD 5 million.
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Environmental impact:
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Screened FI.
The Bank of Baku will be required to adopt and implement the Bank’s
Environmental Procures for Intermediated Financing for all its operations
including compliance with the Exclusion and Referral List and sub-projects’
compliance with national environmental, health, safety and public consultation
requirements as well as submission of an annual report on environment, health
and safety issues.
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Technical
cooperation:
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EU TACIS funded TC for strengthening of BB's SME credit process is already
provided (on a shared based with 4 other participating banks) via its
participation in the Azerbaijan Multi-bank Framework Financing Facility.
Further TC for the implementation of Institution Building Programme, funded by
ETC Fund, will be launched along with the EBRD's equity investment.
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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Company contact:
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Mr. Shahram Oromi, Chairman of the Executive Board
Tel: +994 12 447 00 55
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EBRD contact:
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Ainura Guppy, Operation Leader: guppya@ebrd.com
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Business opportunities:
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For business opportunities or procurement, contact the client company.
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General enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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