MANAMA Dec 9 International Bank of Azerbaijan
(IBA), the country's biggest lender, plans to raise $150 million
through an Islamic syndicated loan early next year and double
its Islamic banking assets by the end of 2013, according to a
Behnam Gurbanzada, IBA's director of Islamic banking, said
the bank planned to sign a mandate in January and close the deal
The one-year private syndication would be the first of its
kind in Azerbaijan and would help IBA cater to the estimated 93
percent of its 9 million population who are Muslim.
The bank is in talks with a number of Gulf-based lenders to
manage the syndication. Gurbanzada did not disclose their names.
IBA, 50.2 percent-owned by Azerbaijan's Ministry of Finance,
holds a 40 percent share of banking assets in Azerbaijan. It
offers sharia-compliant products through an Islamic window,
which follow religious principles such as a ban on interest and
on pure monetary speculation.
IBA plans to increase its Islamic banking assets to $120
million by the end of 2013 from $60 million currently,
"We are planning to increase Islamic banking activity with
the help of our subsidiaries and reach $500 million in assets in
This would help the bank launch products domestically and
prepare it for future expansion across neighbouring and other
countries, where it sees opportunities for Islamic finance.
"IBA would like to create a strong platform for Islamic
banking in Azerbaijan and use it for implementation with its
subsidiaries in Russia, Georgia and in Qatar," Gurbanzada said.
Plans to have an Islamic banking subsidiary in Qatar by the
end of this year await regulatory approval.
Growth would be driven by new products including small
business lending, vehicle and real estate financing and
financing of export-related activities.
Managing private clients' assets through wakala, or agency
agreements, could grow to $30 million in 2013, Gurbanzada said.
"We are also working on the retail market and inviting
private clients to participate in wakala deposit pools. At
present we have received a bid for $3.5 million."
IBA is also working to attract a $15 million wakala deposit
from the Islamic Corporation for the Development of the Private
Sector, a Jeddah-based multilateral financial institution, in
order to finance small- and medium-sized businesses.
Also planned are Islamic debit cards based on an
interest-free loan concept and Islamic financing cards with
credit limits based on fixed monthly commissions.
At present the bank is not considering a dedicated
subsidiary for its Islamic banking activities but it could
explore a spin-off when changes to banking legislation are
passed, Gurbanzada said. "I suppose sooner or later we should
come to this significant point".
(Editing by Jane Baird)