Azernews.Az

By Gulgiz Dadashova

The International Bank of Azerbaijan -- a major state-owned bank in the country holding at least 40 percent of all bank assets -- is considering to increase its share capital, and the government is eyeing the possibility of issuing more stock.

The issue of increasing the capital is a priority for the IBA and a relevant strategic plan provides for further capitalization of the bank.

IBA First Deputy Chairman Emil Mustafayev said that the process will be carried out step-by-step and includes both public and private investment.

Mustafayev said no decision on the expected issue of shares has been made yet, but it is under consideration of the government, adding that the bank's strategy stipulates its capitalization by more than 200 million manats.

In April, the bank completed the process of increasing its share capital by 100 million manats. The placement of 416.7 million shares at a par value of 0.24 manats started on June 4, 2012 and was completed on April 11, 2013. During the placement, 422 transactions were concluded, fetching 100 million manats. Following the placement, the banks' authorized capital reached 340 million manats.

"The previous issue of shares in the amount of 100 million manats concluded recently," Mustafayev said. "Certainly, the government paid its share (about 50 million manats) of funds in advance. Activity of the private shareholders in this matter influenced the decision to pay dividends worth 8.6 million manats in 2011. We hope that the decision on the eve of the general meeting of shareholders to pay dividends for 2012 will form the basis for positive involvement of private shareholders in the new issue of shares of the bank."

Recently, the bank's shareholders decided to direct the profit worth 28.3 million manats to increasing the share capital, while the par value of each share will increase from 0.24 manats to 0.26 manats. As a result, the IBA's authorized capital will be increased to 368 million manats.

The 2012 audit report approved by the shareholders shows a profit of 52.9 million manats. Total profit of the IBA was 58.5 million manats last year.

Currently, the bank's capital adequacy ratio meets the requirements of the CBA standards, under which the minimum ratio is set at 12 percent.

However, the growth of the Azerbaijani economy necessitates growth of the banking system. Accordingly, this requires a balanced availability of capital so that economic expansion could be accompanied by this growth, Mustafayev said earlier.

The IBA was established in 1992 as a successor of the Azerbaijani branch of Vnesheconombank. The IBA holds a leading position in the domestic banking sector. The main shareholder is the Azerbaijani government, which owns a 50.2 percent stake and 49.8 percent is owned by private individuals and legal entities.