EBRD extends loan to Bank Respublika for mortgage lending

EBRD extends loan to Bank Respublika for mortgage lending
# 05 December 2008 08:38 (UTC +04:00)
Baku. Nijat Mustafayev – APA-Economics. The EBRD is strengthening mortgage lending in Azerbaijan with a loan of up to $10 million to Bank Respublika for on-lending to private customers.
In addition, the EBRD will increase its ceiling on trade financing for Bank Respublika from $3.5 million to $6 million. Bank Respublika signed up to the EBRD’s Trade Finance Programme in 2005 and has developed an excellent track record. The extension of the limit will allow the bank to serve its pipeline of high-quality new transactions.
The mortgage market in Azerbaijan is still in the early stages of development and especially long-term financing is difficult to obtain. At the same time residential construction is growing steadily and demand for housing surging, especially in the three largest cities Baku, Sumgait and Ganja. As a result, demand for mortgages is exceeding the ability of banks to provide financing.
The EBRD loan to Bank Respublika will help to ease this imbalance by supporting a dynamically and well-established financial institution on a long-term basis. The cooperation with the EBRD will also lead to the establishment of better procedures at Bank Respublika. Technical Cooperation funds provided by the Bank will be used for advisory services and assistance.
Francis Delaey, the EBRD’s head of office in Baku, said, “By providing long-term financing, the EBRD is helping to overcome a key obstacle to a further rise in Bank Respublika’s mortgage business. This will in turn allow the bank to offer longer tenors to its clients which will make mortgage financing more attractive and have a knock-on effect throughout the whole market.”
Khadija Hasanova, Chairwoman of the Executive Board of Bank Respublika, added, “Our partnership with the EBRD will not only help us to strengthen our mortgage business in Azerbaijan, but will also stimulate the development of the private mortgage industry and ultimately contribute to the further development of the housing market in our country.”
Bank Respublika is the fifth largest bank in Azerbaijan in terms of assets and is growing dynamically. The bank has been a partner of the EBRD since 2004 when it received its first loan from the Bank under the Multi Bank Framework Financing Facility for small and medium-sized enterprises. This was followed by further loans for micro, small and medium-sized enterprises in following years. The EBRD works with 9 local commercial banks in Azerbaijan and has provided almost $180 million to its partners in the sector to date.
Bank Respublika has been in operation since 1992. DEG Investment Corporation and Sparkassen International Development Trust hold a 25%+1 joint stake.
As at October 1, its assets stood at AZN 405.1 million, loan portfolio at AZN 279.3 million, deposit portfolio at AZN 147.4 million, total capital at AZN 43.7 million and authorized capital stood at AZN 22.6 million.