Azernews.Az

BAKU – Russia's biggest lender Sberbank and the International Bank of Azerbaijan (IBA), the country’s leading bank, signed a cooperation deal in Moscow last Friday.

The memorandum opens up opportunities for further cooperation of the two countries’ banks in promoting the increase of the Russia-Azerbaijan trade turnover, lending funds for effective sectors of production and mutual supplies. It also envisions financing projects in a variety of fields, including real estate, joint participation in investment programs and opening jobs.

Sberbank and IBA pledged to focus on analyzing and developing the organizational and financial schemes for the implementation of projects, based on the mechanisms of state and private partnership, collecting and processing macroeconomic, legal, and financial data that is pivotal during the realization of projects.

The memo was signed as Russian President Dmitry Medvedev paid an official visit to Baku, during which the two countries put pen to a number of key documents on political and economic relations.

Sberbank is the biggest bank in Russia and the entire Commonwealth of Independent States (CIS). Its assets account for 27 percent of the Russian banking system and 26 percent of the country’s banking capital. The Banker magazine said in its July 1 issue that Sberbank ranks 43rd in the world for the volume of capital.

IBA continues working hard in the countries playing an important role in Azerbaijan’s foreign economic activities. Given that Azerbaijan has historically maintained relations with Russia and that the largest Azerbaijani diaspora is based there, IBA is keen on expanding its business in the neighboring country. The opening in 2002 of IBA Moscow, an IBA subsidiary, by Azerbaijan’s late national leader, former President Heydar Aliyev was remarkable for the entire Azerbaijani banking system.

IBA Moscow has created a broad branch network and currently runs offices in Moscow, St. Petersburg and Yekaterinburg.

IBA is also the most capitalized bank in Azerbaijan, with capital amounting to 240 million manats ($300 million). As of July 1, the bank’s capital on its balance sheet was 627.7m manats ($784.6m). IBA has transferred $27.5m to the country’s state budget this year.

IBA’s revenues in the first half of 2010 made up almost 190m manats ($237.5m). Pre-tax profit of the bank amounted to 41.4m manats (over $51.7m). Net profit constituted 31.5m manats ($39.3m).

IBA, whose outstanding performance has been repeatedly highlighted by the world’s leading financial institutions, saw its long-term rating upgraded to the BBB- level by Fitch in May. Also, in August, Moody’s Investors Service changed to stable from negative the outlook on IBA. The agency assessed IBA’s long-term local currency deposit rating at the level of Baa3 and its long-term foreign currency subordinated debt rating at Ba1.

IBA was established in 1992 as a successor of the Azerbaijan branch of the Foreign Economy Bank. IBA provides banking services to large corporate clients and, to a lesser extent, to individuals.

IBA is Azerbaijan’s only state-controlled bank. The state-owned share in the bank is 50.2 percent.