Ilham Aliyev Orders to Prepare IBA for Privatization

President Ilham Aliyev has issued a decree on the preparation for the privatization of the state stake in the International Bank of Azerbaijan (IBA).

The decree provides for measures to improve the IBA privatization. In particular, the Ministry of Finance is in charge for 15 days to withdraw from the bank bad loans and transfer them to the balance of the non-banking credit organization CJSC Agrarkredit. Then the credit institution will issue long-term bonds under the state guarantees for the effective management of the assets.

It is also envisaged due to the limit of public debt in the state budget to restructure obligations on troubled assets of IBA.

No more than in six months, the President is to be submitted a plan of action for the sale of the state share in IBA, which is 50.2%.

At the end of 2013 IBA took the 31^st place in the ranking of the largest banks in the CIS. It demonstrated the growth of assets by 24.5% to 9.8 billion dollars. Besides IBA, in the rating there were 4 other Azerbaijani banks, which were located in the range from the 137^th to the 194^th place.

As Turan previously noted, in October 2009, the international rating agency Fitch Ratings referred nearly one-third of all loans of IBA to the category of problem loans. To date, customers' problems with the payment of bank loans resulted in 27.8% of "bad debts" in the loan portfolio of IBA. In the structure of bad credits at IBA, 18.6% of them were overdue ones and 9.2% were restructured, on which the recipient again came to agreement with the bank to change the terms of payment.

IBA is the only bank where the controlling stake belongs to the state. By no obvious reasons the government has set aside a roadmap for the restructuring, reform and privatization of IBA prepared by the IMF in 2012. Its implementation, according to the IMF, will open the possibility of the development of the private banks, as well as diversify the risks facing the country's banking system. -0-