Agriculture bank creation postponed
By Gulgiz Dadashova
The state-owned non-banking credit organization CJSC Aqrarkredit has put aside the goal of transforming into an agrarian bank for now, giving priority to overseeing the disserted assets of the International Bank of Azerbaijan.
The NBCO told Trend that the management of problem loans transferred from the IBA – which will be privatized after undergoing a cleanup effort to get rid of distressed assets resulting from poor management – is a more important task for Aqrarkredit at this stage.
Economists have repeatedly raised the issue of the need to create a bank specifically devoted to financing agricultural projects in the country. The need to establish an agrarian bank emerged with the growing strength of the country's agriculture sector, which employs over 40 percent of the population and is given significant assistance by the state.
Earlier discussions were held on creating such a bank on the foundations of Aqrarkredit or a separate bank in Azerbaijan. The consultations were conducted with the World Bank, the IFC, EBRD, and other international financial institutions, but efforts have been fruitless thus far.
"Currently, we do not know exactly how much of the problem assets will be transferred to our management, but, given the scale of the bank [IBA], it is clear that this is a large enough portfolio," a source at Aqrarkredit said.
President Ilham Aliyev ordered rehabilitation measures for the IBA, in a decree on July 15 that should be completed within the next six months. The president’s order also mentioned that the bank's privatization plan should be submitted to his office for review.
Aqrarkredit has had prior experience in managing the troubled assets of banks. In the early 2000s, Aqrakredit oversaw the troubled loans and liabilities of Azerbaijan’s three largest banks – Sberbank, Industrial-Investment Bank, and Agro-Industrial Bank – during a consolidation process to form the United Universal Joint Stock Bank [now Kapital Bank].
Aqrarkredit is the largest non-bank credit organization of the country and has been operating since 2001. Aqrarkredit’s main shareholder is the Finance Ministry, which owns 99.9 percent of shares in the credit organization, while the rest is divided equally between Azersigorta State Insurance Company and the Irrigation and Water Management Agency.
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