Unibank was established on 15 October 2002 as a result of the merger of two private commercial banks of Azerbaijan - Mbank and Promtekhbank. Unibank is a universal finance and credit institution offering retail and corporate services. UniBank's shareholder group consists of: (i) Eldar Garibov; Igor Yakovenko; Emin Guliyev; EBRD; DEG and minority shareholders.

The total project cost consists of a proposed US$10 million loan to Unibank to support the growth of the Bank’s microfinance and SME portfolio.

10.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity

* These investment figures are indicative

Unibank is headquartered in Baku. It has 25 branches operating throughout Azerbaijan providing access to finance to MSMEs. IFC’s loan will be to support the growth of its MSME portfolio in both urban and rural areas.

The proposed project will have a 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 an existing 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 SMEs. This in return further slows down the economic growth and job creation in the country. Through this project with UniBank, IFC will add value by 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.Without IFC's financing, the Bank would be forced to significantly scale back its lending to MSMEs.

This project is with the existing IFC client and has been classified as a Category FI project according to the IFC''s Environmental and Social Review Procedure. The project will involve financing of the MSME sector. IFC''s appraisal focuses on closing the gaps in Unibank''s current E&S performance for the existing project, which is a part of IFC’s Central Asia Leasing Facility, and assessing Unibank’s capacity to implement a Social and Environmental Management System (SEMS) to comply with the IFC Exclusion List and national environmental and social laws, which would be the IFC S&E requirements for the proposed project according to the nature of IFC investment. IFC will also appraise Unibank''s labor policies against IFC''s Performance Standard 2 on Labor and Working Conditions. At the current stage UniBank has improved its reporting and adjusted exclusion list to meet IFC requirements. The remaining weakness in Unibank’s E&S performance is the insufficient S&E due diligence procedures, which should be improved prior to IFC investment. Unibank would also be required to confirm it has designated SEMS personnel to manage S&E risks and commit to regular and full annual reporting of S&E performance according to the format to be provided by IFC.