MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) Loans $3m to Muganbank of Azerbaijan for On-Lending to Corporates, Individuals for Energy Efficiency, Renewable Energy Projects

The European Bank for Reconstruction and Development (EBRD), a multilateral institution headquartered in London, is loaning USD 3 million to Muganbank, a financial institution that offers retail and corporate banking services in Azerbaijan. The loan will be disbursed under the “Caucasus Energy Efficiency Programme (CEEP)” of EBRD. The funds are to be on-lent to corporations and individuals with the aim of financing energy efficiency and renewable energy projects in the country. The beneficiaries may fund “energy efficient equipment, appliances and materials,” including “double-glazed windows, insulation, gas boilers, solar water heaters and rooftop solar panels”[1].

Muganbank will also benefit from donations of unspecified size from the European Union’s Neighbourhood Investment Facility, EBRD’s Shareholder Special Fund and the Austrian Federal Ministry of Finance for “technical assistance and investment incentives for households”[1].

Mr Neil McKain, EBRD’s head of office in Baku, said that “EBRD has been working with Muganbank since 2006 to support financing of the real sector of the economy. This credit facility is a new product for Muganbank, as well as for the market in general and therefore will mark a new phase in our longstanding relationship”[1].

Muganbank reported total assets of AZN 334 million (USD 425 million), loans to customers of AZN 218 million (USD 278 million) and liabilities to customers of AZN 152 million (USD 194 million) as of December 31, 2013. In 2013, EBRD invested EUR 8.5 billion (USD 11.4 billion) in 392 projects in 34 countries. In Azerbaijan, EBRD seeks to support the growth of the “non-oil private sector”[1] with a particular focus on small and medium-sized enterprises (SMEs).

By Alíz Crowley, Research Associate

About Muganbank Open Joint Stock Company (OJSC)

Headquartered in Baku, Muganbank Open Joint Stock Company (OJSC) was established in 1992. The bank offers a range of retail and corporate banking services in Azerbaijan. As of December 31, 2013, Muganbank reported total assets of AZN 334 million (USD 425 million), loans to customers of AZN 218 million (USD 278 million) and liabilities to customers of AZN 152 million (USD 194 million).

About European Bank for Reconstruction and Development (EBRD)

The European Bank for Reconstruction and Development (EBRD) is a multilateral institution headquartered in London, England. The bank began operations in 1991 upon the agreement of 40 countries, and it is owned by 64 countries as well as the European Investment Bank and the European Union as of 2014. It aims to finance operations that are both commercially viable and assist development in Eastern Europe, Central Asia and North Africa. It does this by providing loans, debt securities, equity investments, guarantees and technical assistance to micro- and small businesses via commercial banks and non-bank microfinance institutions (MFIs). With total assets of EUR 49 billion (USD 65 billion), EBRD invested EUR 8.5 billion (USD 11.4 billion) in 392 projects in 34 countries during 2013.

Sources and Additional Resources

[1] European Bank for Reconstruction and Development (EBRD), EBRD and Muganbank to Boost Energy Efficiency in Azerbaijan

[2] Muganbank, About Us, Annual Reports

MicroCapital, September 30, 2014, European Bank for Reconstruction and Development (EBRD) May Loan $38m to Raiffeisen Leasing Romania for Micro-, Small, Medium-sized Enterprises (MSMEs)

MicroCapital, September 19, 2014, European Bank of Reconstruction and Development (EBRD) Commits $5m to Belarusian Minsk Transit Bank (MTB) for Onlending to Micro-, Small, Medium-Sized Enterprises (MSMEs)

MicroCapital, August 24, 2014, European Bank for Reconstruction and Development (EBRD) Lends $5m to DemirBank of Azerbaijan to Promote Residential, Business Energy-Efficiency Projects

MicroCapital Universe Profile: European Bank for Reconstruction and Development (EBRD)

MicroCapital Universe Profile: Muganbank Open Joint Stock Company (OJSC)

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