As at May 2015 the IBA accounted for just under 36% of the total loan stock. The IMF has long pushed for the break-up of the IBA, arguing that its dominant market position and state guarantees suppress competition, while poor corporate governance undermines financial stability. 

Weak competition, as illustrated by the wide spread between deposit and lending rates, is one of the factors behind the relatively low level of bank lending in Azerbaijan.

The authorities appear to support the IMF's critical view of the IBA's performance. The text of the July 15 decree suggests the bank is now facing capital shortfalls: "shortcomings in the management, investment and loan policy [...] worsened the bank's financial state, caused an increase in the share of distressed assets and reduced its liquidity".

According to the decree, a state-owned entity, Agrarkredit, will issue publicly guaranteed bonds to buy high-risk or non-performing assets from the IBA. This will lead to a rise in public and publicly guaranteed debt; at present, the size of the asset transfer is unknown.

The rehabilitation programme should help to improve the capital levels of the bank. Aggregate capital levels of Azerbaijan's banking sector remain strong, according to the financial stability assessment of the Central Bank of Azerbaijan (CBA).

However, according to Fitch, a ratings agency, the IBA faces "substantial" problems owing to "low core capital ratios and the substantial stock of unreserved high-risk assets".