EBRD, KfW DEG increase stakes in crisis-stricken Azerbaijani Unibank

By bne IntelliNews June 19, 2017

The European Bank for Reconstruction and Development (EBRD) has increased its share in Azerbaijan's default-threatened Unibank from 12.15% to 21.9% while the German Investment Corporation (KfW DEG) has upped its stake in the lender from 6.68% to 27.6%, Trend news agency reported on June 19. 

The two international financial institutions (IFIs) expanded their shareholdings in the troubled bank by acquiring some of the AZN49mn (€25.8mn) of new shares that the bank placed on the Baku Stock Exchange to increase its capital toAZN119mn.

Unibank is believed to have been placed under "special supervision" by the financial markets regulator because it is at risk of default. In June 2016, ratings agency Fitch rated the lender as 'CCC' and said that it was at risk of default, before withdrawing its rating.

The Azerbaijani authorities remain secretive about the banking sector problems they are confronted with. Azerbaijan's banks have been hit by a wave of currency depreciation, slow lending and economic recession. In May, the country's largest bank, International Bank of Azerbaijan (IBA), defaulted on its foreign obligations despite having been rescued by the government in 2015. In 2016, the regulator revoked the licences of 11 banks for failing to meet minimum capital requirements or abide by prudential norms.

Unibank ranks among the top 10 largest banks in the country, with assets recorded as in excess of AZN800mn in 2015.

This is the second time in less than a month in which the EBRD has increased or has mulled increasing its share in a crisis-stricken Azerbaijani bank by injecting capital to improve financial health; at the end of May, the multilateral lender was said to be considering taking a bigger stake in Demirbank.

Related Articles

BP, Socar extend production sharing deal on largest Azerbaijani oil field cluster to 2050

British oil major BP and Azerbaijani national oil company Socar on September 14 signed a contract extending their production sharing deal for Azerbaijan’s biggest cluster of oil fields until 2050. ... more

Fitch downgrades Azerbaijan's Accessbank to 'BB-'

Fitch Ratings downgraded the long-term issuer default rating of Azerbaijan's Accessbank from 'BB+' to 'BB-' with a stable outlook on September 6, while affirming its viability rating at 'f'. One ... more

Israel's defence ministry halts drone exports to Azerbaijan amid investigation

Israel's defence ministry has halted a company's exports of "suicide" drones to Azerbaijan in the midst of an ongoing investigation, newru.co.il reported on August 29. Aeronautics Defence Systems ... more

Dismiss