\AGB is one of the top private banks in Azerbaijan with total assets in the amount of $184.8 million, net loan portfolio of $127.2 million and equity of $21.6 million as of December 31, 2007. The Bank provides a full range of banking products including corporate loans (mainly to small, medium and micro entrepreneurs), car loans, consumer loans and mortgage finance. The main shareholders of the Bank are: Mr. Chingiz Asadullayev, Mr. Farzulla Yusifov, IFC and Kazimir Caspian Fund Limited.

The proposed IFC investment is a $15.0 million subordinated loan for the IFC’s own account.

15.0 million (USD)

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

* These investment figures are indicative

The Bank is headquartered in Baku, Azerbaijan, and operates through its network of 13 branches and offices located in the capital city Baku and throughout Azerbaijan’s regions.

The successful implementation of this project will: - promote SME lending in the economy; - develop financial intermediation by increasing the kind of products and services available in the market; and - underpin the overall growth in the economy, as higher loan volumes will benefit customers, suppliers and new entrants.

IFC’s developmental contribution is expected to be in the following areas: - Enable the Bank to maintain the fast growth of its SME and retail business; - Provide longer term funding which will increase the Bank’s outreach and the affordability of funding in the country; and - Help deepen the financial markets, stimulate competition in the financial sector.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

During appraisal, IFC will analyze the activities proposed to be supported for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:

- The IFC FI Exclusion List and/or
- The applicable National Social and Environmental Laws and regulations and/or
- The IFC Performance Standards

As an existing IFC client AGB is required to develop and maintain a Social & Environmental Management System (SEMS) to screen investments against Azeri national environmental, health, and safety regulations and applicable IFC policies and guidelines and appoint officers responsible for social and environmental risk management. A recent review of the Bank''s procedures has identified supplemental actions necessary for the Bank to undertake with regard to its procedures.

AGB will be required to:

- Upgrade its existing SEMS prior to disbursement to the satisfaction of IFC
- Commit to implement the SEMS, to ensure that its investments/activities are in compliance with the applicable Performance Requirements
- Continue to have staff designated as SEMS officers and continue to submit periodic reports to IFC.