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June 2, 2017 www.intellinews.com I Page 3
Unibank, AtaBank, DemirBank among
5 Azerbaijani banks placed under special supervision
Local sources named Unibank, AtaBank and DemirBank as three of the banks, the latter
of which is now being considered by the Eu- ropean Bank for Reconstruction and Develop- ment (EBRD) for a recapitalisation worth $41mn (AZN70mn), local banking sources told bne IntelliNews. The EBRD is already a shareholder with a 25% stake in the medium-sized Azerbai- jani lender, which was on the verge of default
in November, according to Fitch Ratings. Dutch development finance company FMO is also a 10% shareholder in DemirBank.
Aslanli’s statement comes amid rising concerns about the entire Azerbaijani banking sector after its largest lender, International Bank of Azer- baijan (IBA), defaulted on its foreign currency obligations in early May. The steep depreciation of the Azerbaijani manat that started in 2015, coupled with an economic recession prompted by low oil and gas prices, have affected the whole Azerbaijani economy and the banking sector
in particular. Problem loans in the sector now
comprise 30% of all loans, according to Moody’s Investors Service.
In 2016, the government revoked the licences of 11 of the country’s 44 lenders due to low capitalisation and the violation of prudential norms. Earlier this year, AccessBank, the country's fifth largest lender and previously a strong bank owned in part by inter- national financial institutions, had its viability rating reduced to ‘f’ by Fitch Ratings after the share of non-performing loans in its portfolio rose to 27%.
Unibank is the sixth largest bank in Azerbaijan by assets, while AtaBank is the country’s ninth larg- est lender.
According to local sources, the Azerbaijani au- thorities are looking to merge AtaBank with another small bank, the Caspian Development Bank (CDB). In April, CDB announced on its web- site that the managements of the two banks were assessing the possibility of a “reorganisation”.
bne IntelliNews contacted the EBRD to con-
firm speculation that it is looking to turn some $41mn that it has given DemirBank in loans into share capital. The EBRD had not responded by press time.
In his statement, Aslanli also decried the high interest rates that banks charge businesses for loans. They reportedly average from 22% to 26% for loans in Azerbaijani manats and from 13% to 15% for foreign currency-denominated loans.
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