The Board of Directors of the European Bank for Reconstruction and Development (EBRD), an international bank established in 1991 to support market economies and democracies in countries from central Europe to central Asia, will meet to discuss an increase in previously announced syndicated loan to Microfinance Bank of Azerbaijan (MFBA).
Initially, the EBRD planned to provide syndicated loan in the amount of USD 20 million to the MFBA for on-lending to Micro and Small Enterprises (MSEs). The proposed project now expands the loan to USD 40 million. In providing for the loan, EBRD will use the A/B loan syndication structure, in which commercial banks participate in the loan. The portion EBRD lends is referred as the A loan and the remaining portion as the B loan. Of the newly increased loan, EBRD plans to retain USD 10 million on its own account and offer up to USD 30 million to participating commercial banks.
EBRD is one of the six shareholders of the MFBA; others being the International Finance Corporation, the Black Sea Trade and Development Bank, the German government’s development agency KfW Development Bank, German consulting company LFS Financial Systems GmbH, and microfinance consultants Access Holding. EBRD invested USD 1.3 million in the creation of MFBA and holds 20% share. The shareholders recently increased the share capital of MFBA by USD 11.04 million, making MFBA one of the 10 largest banks in Azerbaijan with a total capital of USD 40.49 million.
MFBA has 13 branches. At the end of 2007, MFBA had a loan portfolio of 29,000 credits totalling more than USD 72 million. According to the MIX Market, in 2007 the number of active borrowers of the bank reached 46,653, the average loan being USD 2,435. The 2007 debt to equity ratio was 713.61% with 4.51% of return on assets. MFBA received Alpha rating for highly recommended from Micro-Credit Ratings International Limited (M-CRIL), a micro-credit rating agency.
EBRD has a subscribed capital totalling USD 30.97 billion, and a credit rating of AAA from Standard & Poor’s and Aaa from Moody’s.
By Ipek Kuran, Research Assistant
Additional Resources:
Micro Finance Bank of Azerbaijan
The MIX Market profile for MFBA
Standard & Poor’s Rating Report – EBRD
Project Summary document – EBRD loan
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