AGB was established in 1992 as a joint-stock commercial bank providing services to the state owned gas sector, and was 49% owned by Azerigaz State Concern and 51% - by private individuals. Today, the public sector ownership is less than 1% and the Bank no longer lends to Azerigaz and its affiliates.

AGB’s major shareholders are Mr. Yusifov (member of AGB’s Supervisory Board) and Mr. Asadullaev (the Chairman of the Supervisory Board). Other shareholders include the management of the Bank - the CEO and other senior managers of the Bank who have minority stakes (not more that 2-3% each). Overall, 94% of the Bank is owned by individuals.

The estimated amount of IFC’s equity investment is up to $2.3 million representing approximately 17.5% shareholding in AGB. The equity investment is a part of IFC’s total funding package to AGB, including $3.0 million 5-year senior loan and up to $1.0 million Trade Finance line for 18 months.

2.30 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	2.30

* These investment figures are indicative

The Bank operates in the Republic of Azerbaijan and headquartered in the capital city of Baku. The Bank has 8 branches and throughout Azerbaijan and the majority of operations is concentrated in the capital city of Baku. The Bank will use the IFC investments in funding projects throughout Azerbaijan for diversified industries.

The World Bank Group strategy in Azerbaijan is to support diversified economic growth and maintain macroeconomic stability, as a necessary condition for reducing poverty. In recent years, Azerbaijan has achieved strong economic growth largely as a result of oil sector development and high international oil prices. The World Bank Group strategy is focused on achieving balanced development in the non-oil sector across Azerbaijan''s regions. Sustainable economic development can be achieved if driven by a dynamic private enterprise sector outside the oil sector and stronger financial sector intermediaries, supported by a more streamlined efficient and transparent public sector. Within this context, IFC’s strategy in Azerbaijan is focused on broadening financing opportunities for small private enterprises linked with as well as outside the oil and gas sector and financial sector development.

This project is highly complementary to the World Bank Group country strategy. The project, being a part of IFC’s total investment package to AGB, would strengthen the financial position and corporate governance of the Bank, enabling it to meet the demand for SMEs funding and thus, increasing the competition in the SME lending/leasing market, contributing to development of non-oil sector and economic growth. The Technical assistance from IFC would be targeted to improve the Bank’s corporate governance and risk management practices which would contribute to overall transparency in the banking system and strenghten prudent management practices of the Bank.

As an existing client, this project has been categorized as Category FI Type 2 project according to IFC''s environmental and social review procedure. Azerigazbank has established an environmental management system for the environmental and social review and supervision of subprojects. Azerigazbank is required to ensure that each subproject to comply with host country requirements, the relevant IFC Exclusion List and IFC safeguard policies. Category A subprojects also will be required to meet World Bank Group environmental, health and safety guidelines, and must be subject to prior review and clearance by IFC’s Environment and Social Development Department. Azerigazbank has committed to attend IFC’s environmental training course for financial intermediaries. Azerigazbank has been reporting to IFC regularly and the Environmental and Social Risk Rating (ESRR) for the project is F1 – Good.

For the proposed investment, the Bank should ensure that appropriate staff attends the IFC training and it commits to maintain its EMS and continue to meet all the above requirements, to the satisfaction of IFC, during the presence of IFC''s investment in the bank.
Location of environmental documents In locally affected community