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Azerbaijan’s IBA to Decrease Interest on Loans

The International Bank of Azerbaijan, the country's largest lender, seeks to strengthen its financial stability in the coming years through a decrease in the volumes of borrowed capital and lower interests on loans.

IBA Board Chairman Elmar Mammadov discussed the decision in an interview with local media.

He further noted that it is too early to speak about the privatization of the bank, because in the next few years, its main purpose will be institutional development.

The preparation period for the privatization may take 3-5 years, according to the authorities, thus the bank is likely to remain state-owned for at least the medium term.

"Currently, the population is worried about the safety of their deposits in the IBA, which is caused by rumors on the imminent privatization of the state stake in the bank," he said, stressing that there is no reason to worry at all.

"At this stage, it's too early to talk about the privatization of the bank. The current measures cover pre-privatization rehabilitation of the bank. The main objectives of the new Board of the bank in the next four years are institutional development, strengthening of its financial stability, and greater control over the management of financial resources," he said.

The IBA holds about a third of the assets and loans in the Azerbaijani banking system. Its financial situation has remained fragile for an extended period of time, despite receiving state support.

Restructuring the largely state-owned IBA so as to reduce its dominance in the sector was set as a priority for achieving a stronger banking system.

Azerbaijan's biggest bank will be privatized after undergoing a cleanup effort to get rid of distressed assets resulting from poor management, President Ilham Aliyev said in a decree on July 15.

Mammadov asserts that the transfer of IBA's distressed assets to Aqrarkredit will help to restore the bank's financial position.

"The transfer of the Bank's problem assets to the specialized body will help the IBA to restore its financial position and ensure its sustainability. This is because at the moment the bank needs healthy capital to raise additional funds. The withdrawal of problem assets of the Bank, with the support of the state and use of an effective mechanism for this will enable the IBA to attract real financial resources instead of distressed assets," he noted.

The presidential order requires that the bank transfer its distressed assets to the state-owned non-banking credit organization Aqrarkredit CJSC.

Mammadov further added that the IBA would analyze the activities of all its foreign subsidiaries and representative offices, and test the effectiveness of their work.

Source: Azernews

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