Finance

Finance

EBRD lends a financing package to Muganbank

14 December 2009 08:03 (UTC +04:00)

Baku. Nijat Mustafayev â€“ APA-Economics. The EBRD is continuing to support the real economy in Azerbaijan with a $3 million financing package to Muganbank to ensure a continuous flow of credits to small businesses and to enhance the local bankâ€™s trade facilitation activities.
The EBRD facility includes a $2 million credit line for on-lending to micro, small and medium enterprises (MSMEs) operating in Azerbaijan.
The Bank will also provide an additional $1 million trade finance facility under the Bankâ€™s Trade Facilitation Programme (TFP) which will bring the total TFP facility for Muganbank to $3 million. The funds will be used to support guarantees, letters of credit and bank-to bank reimbursement undertakings issued by Mugan Bank in the context of cross-border trade.
Although Azerbaijan has been relatively less affected by the crisis than other countries in the region, the banking sector is experiencing a slowdown in lending activities due to limited access to international capital markets, with small businesses being particularly affected.
The EBRD funds will allow Muganbank to maintain sustainable MSME lending activities, the core of its strategy, thereby addressing the high demand for loans from local entrepreneurs, and to increase the availability of trade financing to Azerbaijani companies.
The proceeds of the EBRD financing will be used to finance investments and working capital of local enterprises with medium and long-term loans as well as to guarantee cross-boarder trade of private businesses.
â€œThis loan is the third financing facility provided by the EBRD to local Azerbaijani banks in the last week. It reinforces the EBRDâ€™s commitment to support the economy of Azerbaijan and will give an additional boost to the competition in the local banking sectorâ€, said Michael Taylor, Director for Central Asia, Caucasus and Mongolia in the EBRD Financial Institutions Team.
â€œThis is a good opportunity for us to use this credit line to fortify our positions in MSME lending niche. We have a large number of potential clients, requiring that kind of crediting and TFP financing. We are very proud to get new funding from the EBRD, our main partner among international financial institutionsâ€, said Elmir Hasanov, Chairman of the Muganbank.
Muganbank is a mid-sized private bank in Azerbaijan operating through 29 offices. To date the EBRD has provided the institution with financing facilities worth $13 million.
Since the beginning of its operations in Azerbaijan, the EBRD has committed over $1 billion across more than 90 projects in corporate, financial, infrastructure and energy sectors.