International Bank of Azerbaijan (IBA) is the only state-owned bank in the oil-producing former Soviet republic, with the finance ministry holding 51.7 percent. It holds 35 percent of banking assets in Azerbaijan, and the privatisation is in line with advice from the International Monetary Fund.

"The shortcomings in the management, investment and loan policy of the International Bank of Azerbaijan in recent years, as well as financing of less efficient, risky investment projects, worsened the bank's financial state, caused an increase in the share of distressed assets and reduced its liquidity," said Aliyev's decree.

It said that in order to overcome the current situation, restore the bank's financial position and ensure its sustainability, there was a need "to transfer the bank's distressed assets to a specialized structure."

The president ordered the finance ministry and the central bank to determine the share of the bank's distressed assets within 15 days, remove these from its balance sheet in exchange for liquid funds in stages, and transfer them to the state-owned non-banking credit organisation Agracredit.

These rehabilitation measures should be completed within the next six months and the bank's privatisation plan should be submitted to the president, the decree said.

 

(Reuters)