US$ 7 million to Demirbank in Azerbaijan

By Svitlana  Pyrkalo

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The EBRD is continuing to support the development of the private banking sector in Azerbaijan with a US$ 7 million subordinated loan to Demirbank, the country’s 9th bank in terms of assets.

In Azerbaijan, access to long-term capital is still restricted for private independent banks. The EBRD’s 10-year loan will provide much-needed capital to Demirbank – one of the EBRD’s long-standing partners in the country – to increase lending capacity and support asset growth.

Neil McKain,  Head of the EBRD office in Azerbaijan, said: “Demirbank will be the first institution in Azerbaijan to get a subordinated loan from the EBRD.  As a trusted client, Demirbank will be able to benefit from longer-term financing rarely available in the country”.

A subordinated loan is a type of loan that ranks below other loans with regard to claims on assets or earnings. This type of loan is normally issued to banks which show strong performance and are perceived as trusted institutions.

Demirbank is a private commercial bank, 25 per cent owned by the EBRD. It has pursued a successful growth strategy in the last five years. The EBRD sees the bank as playing an important role in the development of the private banking sector in Azerbaijan, which is part of the EBRD’s strategy in the country. The loan to Demirbank is being made under the EBRD’s Azerbaijan Financial Sector Framework which also aims to promote further development of the banking sector.

Since the beginning of its operations in Azerbaijan, the EBRD invested almost US$ 2 billion in over 117 projects in the country. In its activities in Azerbaijan, the Bank concentrates on industry, commerce and agribusiness, finance, energy and infrastructure.

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