BSTDB to strengthen business in Azerbaijan in 2015-2018

By Aynur Karimova - AzerNews 

The Black Sea Trade and Development Bank, which supports the principles of the development of regional cooperation, and participates in the financing of projects in member countries, is seeking to increase the number of financial intermediaries in Azerbaijan.

This was noted in the BSTDB cooperation strategy with Azerbaijan in 2015-2018, published on its website.

The bank hopes to find suitable partners for the development of leasing in Azerbaijan.

"It is an area of great potential in Azerbaijan and the Bank intends to use the leasing product not only for financing capital expenditure of SMEs but also for other companies as an effective financing tool for the promotion of regional trade. Medium-term credit lines opened to leasing companies for trade related purposes will enable them to offer their customers finance for capital expenditures on imports from other countries in the region," the document said.

The bank will seek to increase the number of financial intermediaries and consider the possibility of taking part in the share capital of certain financial institutions and funds.

According to the strategy for 2015-2018, BSTDB will avoid new mortgage financing, giving a priority to the agricultural loans to improve food security and social lending.

"The bank is already working with a number of financial intermediaries in Azerbaijan, delivering trade finance products and medium-term lending to micro, small and medium enterprises,” the strategy said. “These activities will continue to be a priority for the bank."

The bank also reported that it will review rendering of services, paying particular attention to the export of goods and services, as well as the development of infrastructure, including energy efficiency.

Moreover, the bank will expand its finance programs in favor of SMEs and trade finance through the intermediaries.

Based on the business plan for 2015-2018, BSTDB plans to sign on average, 2-3 new transactions worth 25-35 million euros every year. There will be from eight to 11 new commitments (signed transactions) within four years. The total amount will be equal to approximately 115 million euros (in the limit of 92-138 million euros).

The bank noted that it will consider projects which intend to increase the supply of energy resources through transport networks with strong environmental and other positive externalities.

"The Bank will focus on projects that envisage modernization and expansion of conventional energy infrastructure in order to facilitate power generation, transmission and distribution inside and outside Azerbaijan. Alternative energy sources such as hydropower, wind and solar are enhancing the potential in this field, while also helping to address a number of environmental issues. Hence, BSTDB will seek to support economically viable projects in the renewable energy sector as well," the document said.

In terms of financing instruments, the Bank’s energy and infrastructure priorities will primarily focus on medium to long-term debt financing products to both local and international companies operating in Azerbaijan.

"Such financing may be used for the purpose of financing corporate development needs, capital expenditures, financing of working capital requirements, refinancing of existing debts, as well as for sound project finance structures."

The bank's experts believe that there may be some good business opportunities in the petrochemical industry within the next four year period for BSTDB to become involved.

"The petrochemical industry is a strategically important one due to the fact that the country has large oil reserves. The country has significant competitive advantage in this sector which is in very early stages of development. Innovative and modern petrochemical facilities will enable realization of increased added value in Azerbaijan's raw materials business as well as broader access to the world market," the report said.

BSTDB will also support the agribusiness sector through financing food-processing and poultry projects. "The Bank will give priority to projects targeting productivity increases in agriculture via infrastructure modernization, development of distribution channels of agricultural products and establishing financing mechanisms for farmers in their activities."

BSTDB will give priority to projects in transportation, in particular cross-border cooperation operations with other member countries which focus on additional road and rail transportation, as well as the improvement of port facilities. It will also follow the changes in the construction market and should it find feasible projects, it will continue its support in this sector.

The BSTDB trade and financial sector strategy was created to develop a network of financial intermediaries. It has presented a number of products, including the combined trade finance, medium-term financing to micro, small and medium enterprises and medium-term mortgage products since the beginning of transactions. Moreover, the bank invests in AccessBank’s share capital to create a microfinance institution in Azerbaijan.

In general, according to the strategy, BSTDB will focus on rendering support for the implementation of the program and priorities of the Azerbaijani government, meeting the market needs for the next four years.

BSTDB was established in 1996 and began operations in June 1, 1999. The bank’s main office is located in Thessaloniki, Greece. The share of Azerbaijan's participation in the capital of the bank accounts for 5 percent. Its members are 11 countries.

At present, the bank’s portfolio on Azerbaijan is $166.978 million on 32 signed loan agreements. The total volume of 34 loans approved at the Board of Directors of BSTDB reaches $214.348 million.