TuranBank was established in 1992 as an LLC and became a joint stock company in March 2005. The Bank’s vision is to be a universal bank providing a wide range of banking products and services to MSMEs and individuals through a wide network of branches and regional centers. The Bank currently has 25 shareholders: five of them legal entities (22% ownership) and 20 are individuals holding the remaining ownership (5 of which are Bank staff). The largest shareholders are Turaj AF, Fidan Company, Mr. Fizuli Guliyev, and Mr Fuad Musayev. The latter is the Chairman of the Board. None of the shareholders have a controlling stake in TuranBank.

The total project cost consists of a proposed US$7 million loan to TuranBank to support the growth of the Bank’s microfinance and SME portfolio.

7.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	7.0
Equity

* These investment figures are indicative

TuanBank is headquartered in Baku. It has 11 branches operating throughout Azerbaijan providing access to finance to MSMEs. IFC’s loan will be to support the growth of its MSME portfolio in these branches as well as new branches in urban and rural areas.

The proposed project will have high development impact. The project is expected to have the following development impacts: (i) increase access to finance for MSMEs; (ii) improve corporate governance; and (iii) deposit mobilization.

IFC has a strong role and additionality in this project providing long-term financing to a new partner bank and current advisory services client of IFC in an IDA country, at a time when there is limited liquidity in the market. This is in line with IFC's financial sector strategy in Azerbaijan to support the financing of MSMEs via new and existing clients. Due to limited liquidity in the market as a result of global financial crisis and economic slowdown in Azerbaijan, banks have significantly reduced, and some even stopped, lending especially to MSMEs. This in return further slows down the economic growth and job creation in the country. Through this project with TuranBank, IFC will add value by: (i) providing much needed financing that is not easily available from other commercial sources, thus enable the bank to continue lending to MSMEs and increase market confidence; (ii) offering a coordinated advisory services program, and (iii) supporting initial dialogue in market consolidation with partner banks . Without IFC's financing, the Bank would be forced to significantly scale back its lending to MSMEs.

This project with a new IFC client has been classified as a Category FI project according to IFC''s Environmental and Social Review Procedure and will involve financing of the MSME sector. IFC''s appraisal will focus on Turan''s capacity to develop and implement a Social and Environmental Management System (SEMS) to comply with the IFC Exclusion List, national environmental and social laws, and possibly Performance Standards for long-term corporate loans if those are to be financed from the IFC funds. The S&E due diligence at this point indicated that the bank’s corporate loans portfolio is larger than the SME loans portfolio, and the bank does not have an SEMS system to manage social and environmental risks associated with its loan portfolio. During the appraisal IFC will work with the bank on designing an SEMS development action plan, as well as will continue appraising Turan''s labor policies against IFC''s Performance Standard 2 on Labor and Working Conditions.