UniBank is an existing client of IFC and is one of the leading private commercial banks in Azerbaijan, with total assets of $375.0 million and equity of $45.0 million as of end-September, 2007. With an expanding branch network in the country, UniBank services the financial needs of small businesses, middle size companies and individual customers. The main shareholders of the Bank are: Mr. Eldar Garibov, Mr. Igor Yakovenko, Mr. Emin Guliyev, EBRD and DEG.

The proposed IFC investment is a mortgage facility in the amount of $15.0 million in the form of an A loan for the IFC’s account.

15.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
Equity

* These investment figures are indicative

UniBank is headquartered in Baku, Azerbaijan, and operates a branch network in various locations in the capital city and in the country.

IFC’s investment is expected to have a high developmental impact in the following areas: - Development of Azerbaijan’s housing finance sector: Consistent with the IFC’s strategy, the project presents the opportunity to promote the development of the primary mortgage market in Azerbaijan by: - providing the much needed long-term funding to the banking system; - raising the mortgage underwriting standards in accordance with the best industry practices; - increasing standardization of mortgage files, documentation, and quality. Furthermore, the project would enable the Bank (and potentially other players) to build a pool of suitable assets for securitization, which would create conditions for the development of secondary mortgage market and potential refinancing mechanisms. - Increased Access to Funding: By providing long term funding, the project will also increase the affordability of home purchase, thus promoting home ownership in the country, as well as providing financing for houses renovation. Furthermore, by developing the mortgage market in Azerbaijan, the project is expected to lower the cost of mortgage loans over the short to medium term. - Strengthening of the Financial Sector: The successful implementation of this project will develop financial intermediation by increasing the range of products and services available in the market. - Demonstration Effect: IFC’s involvement will help bring credibility to the country’s growing mortgage finance sector and will facilitate attracting long-term funding from other sources.

The proposed project fits well with the strategic objectives of IFC and the World Bank Group as it will support the development of the housing finance sector and increase the financial intermediation in the economy. IFC’s developmental contribution is two-prong: - IFC's growing and successful experience in the housing finance sector will ensure that the best international housing finance practices are incorporated; - IFC’s longer term funding will extend the maturity of the mortgage loans available in Azerbaijan and will further stabilize and diversify the funding base of the country’s financial sector.

This project entails IFC support for the business of mortgage finance and has been classified as a Category C project according to IFC’s Environmental and Social Review Procedure. No further review is required.