FIF - Bank Respublika Agri MSME Loan II

Location:

Azerbaijan

Project number:

52878

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Approval date:

10 Aug 2021

Status:

Approved

PSD disclosed:

14 Aug 2021

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Project Description

A senior unsecured AZN loan to be provided under the Financial Intermediaries Framework ("FIF") in the amount of up to USD 9.5 mln equivalent (EUR 7.96 mln) in favour of Bank Respublika. 

Project Objectives

The project is implemented under Financial Institutions Framework with proceeds to be used for on-lending to private agricultural micro-, small and medium sized enterprises (MSMEs) in Azerbaijan in accordance with the FIF Policy Statement. The transaction will support the leading private bank in Azerbaijan through (i) diversification of its funding structure with medium-term LCY resources and (ii) support of its MSME portfolio growth in the agricultural sector.  

Transition Impact

ETI score: 60

The project contributes to the objectives of the FIF, supporting the Competitive and Resilient transition qualities.

Competitive: The project will support BR in growing its MSME portfolio and expanding access to LCY finance to sub-borrowers, with a focus on reaching regional clients and attracting new borrowers.

Resilient: The project aims to ensure prudent lending practices and good portfolio quality.

Client Information

BANK RESPUBLIKA OJSC

Bank Respublika ('BR') is a private Joint Stock Commercial Bank established in 1992. Today, it is a medium-sized bank in Azerbaijan ranking 4th out of 19 private banks (or 5th out of all 26 banks) by assets and by deposits with market shares of 3.2% and 3.3%, respectively, as of YE 2020. BR is headquartered in Baku, has a network of 24 branches and employs 1160 people. It is rated B3 (Positive) by Moody's (April 2021).

EBRD started to cooperate with BR in 2004 and, since then, has extended 14 loans to the bank, including MSME, MCFF and Mortgage lines. 

EBRD Finance Summary

USD 9,500,000.00

Total Project Cost

USD 9,500,000.00

Additionality

The loan's additionality would stem from:

Financing structure: EBRD offers financing that is not readily available in the market from commercial sources on reasonable terms and conditions (e.g., grace period and local currency). 

Standard-setting: clearly defined eligibility criteria for sub-borrowers as well as compliance with EBRD environmental and social standards, covenants and reporting requirements, going far beyond current market standards, thus contributing to competitiveness and resilience of the financial sector as intended under the FIF.

Environmental and Social Summary

Categorised FI (ESP 2019). BR is an existing client of EBRD and has been satisfactorily implementing EBRD's environmental and social requirements under existing exposures. BR will be required to continue to comply with PRs 2, 4 & 9 and further comply with the EBRD's E&S Procedures for Corporate Loans, SME and Micro Loans, and will be required to submit annual environmental and social reports to the Bank.

Technical Cooperation and Grant Financing

Non-TC: (i) the FLRC of 12.5% under SME LCY Programme provided by SME LCY Special Fund in favour of EBRD; (ii) the FLRC of 10% provided by EBRD Shareholder Special Fund in favour of PFI with a cap of 75% for any single sub-loan. 

Company Contact Information

Aslan Abasov
Aslan@BankRespublika.az
+994 (12) 598 08 00
http://www.bankrespublika.az
Khagani str., 21, AZ1000, Baku, Azerbaijan

PSD last updated

14 Aug 2021

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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