The State Oil Fund of Azerbaijan (SOFAZ) has placed a deposit of $1 billion in the International Bank of Azerbaijan (IBA). Since the beginning of SOFAZ activities in June 2001, the sovereign fund for the first time placed its capital in the domestic market of Azerbaijan.
It should be noted that this occurred at the request of the government; it is necessary to save the IBA, from which, according to the official report of the Ministry of Finance of Azerbaijan, $ 3.7 billion and 1.1 billion EUR was transferred to offshore accounts with no return from October 2009 to March 2015. In addition, during this period legal and natural persons were granted bad loans for AZN 1.3 billion ($ 1.65 billion), $ 1.4 billion and 300 million EUR.
About $ 1 billion deposit of the Oil Fund was used to service the most expensive foreign obligations of IBA.
According to the IMF, a preliminary joint audit by the Central Bank and the Ministry of Finance showed that the amount of bad assets in the International Bank reached 7 billion AZN (70% of the total assets).
‘At the same time, the bank still has external liabilities of $ 3 billion. In addition, IBA expects that the government will provide an additional 500 million AZN for its recapitalization. In addition to this, the Central Bank of Azerbaijan has provided IBA a subordinated debt of 1 billion AZN, and to provide IBA a constant income the Central Bank raised a deposit from the bank for AZN 3 billion at 5% per annum,’ the IMF report says.
According to the report, the Ministry of Finance, which acts on behalf of the government as shareholder of IBA, will increase its stake in its capital to 95% before the end of 2016.
‘By the end of 2014 the Ministry of Finance owned 51% of the shares of the bank, but its share reached 85% by the end of 2015. After completion of the capital injection to the end of 2016 the government's share in the capital of IBA will be increased to 95%,’ the report says.
* The International Bank of Azerbaijan was established in January 1992. -0--
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