OREANDA-NEWS. August 02, 2011. Appreciable increase in the functional role of commercial banks in the domestic economy plays a significant role in improving the economic situation in the country. As the Lord Mayor of the City of London Alderman Nick noted in one of his speeches at the forum “Great Britain in Azerbaijan” held in the past year by the Middle East Association and the International Bank of Azerbaijan, which took place in London: “Azerbaijan's banking industry today is undoubtedly the example of the standards of transparency and good governance, reported the press-centre of IBA.

An important role in these processes belongs to the International Bank of Azerbaijan. The credibility of the leader of the country's banking sector is growing year after year, both outside and inside the country. An example is one of many factors: the number of bank customers today is about 800 thousand.

The leader of the bank in the region is preparing for privatization. Privatization of state share in charter capital of the bank consists of two stages.

In the first phase of privatization the consulting services are stipulated and in the second – receiving of offers and other works. Under the consulting services meant that the consortium, which involves Pricewaterhouse Coopers and Salans & Rotshield, will provide consulting services to the state. And on the next stage the privatization of other banking institutions is envisaged.

Customers, and all of us wondering whether the bank can maintain its current position as a market leader, what it will be, what will be its activity after the completion of this process? Let's see what they think about it in the international arena, where our domestic bank is well known by its activity.

“Privatization will lead to an increase in autonomous power, transparency, improve corporate governance and strengthening the capitalization of the bank”, wrote “Seeking Alpha” magazine, respected in financial circles, with reference to the international rating agency Moody’s Investor Service. The agency believes that the privatization of the International Bank of Azerbaijan will have a positive impact on its operations.

“Privatization of the Bank will also support its dominant status as the MBA will benefit from increased capital, which would increase funding for large companies, as well as a wide range of clients through an extensive distribution network”, - is mentioned in the Moody’s report. “Privatization will also improve the competitive dynamics of the banking sector and strengthening of the aggregate financial performance of banks” - emphasizes the agency.

According to the expectations of Moody’s, as a result of issue of shares the capital of IBA will be increased significantly. IBA Consultants will prepare recommendations on the conditions of privatization, render legal and technical support, appreciate the government’s share and will help the bank to attract strategic investors.

Moody’s in its report emphasizes that IBA is of strategic importance, as plays historically important role in large-scale projects of national importance for Azerbaijan. “It will probably be a long project and we do not expect to complete the privatization of IBA this year” – is informed in the report.

The Bank actively continuing its activity reaches all the success in its everyday work. According to the Head of Press-service of IBA, R.Aghayev, recently experts of the Center for Economic Analysis “RIA-Analysis” conducted a study of the banking system of CIS countries. The analysis was performed on the basis of official data of the bank statistics and statements of banks from public sources. As a result was performed an assessment of non-consolidated assets of banks as of January 1, 2011. Based on these estimates was compiled list of 100 largest banks in the CIS and Georgia in terms of assets volume on January 1, 2011.

Among the 50 largest banks of CIS is the bank from Azerbaijan - International Bank of Azerbaijan, which took 33rd place in the ranking. Total rating included the banks from 7 countries: Russia, Ukraine, Kazakhstan, Azerbaijan, Belarus, Georgia and Uzbekistan. Other 5 countries of CIS (Armenia, Kyrgyzstan, Moldova, Tajikistan and Turkmenistan) according to experts of “RIA-Analysis” have not banks with the volume of assets necessary to enter the rating.

MBA as one of the 50 richest banks in the CIS today finances important projects of republican scale. These are projects in the field of innovation, industry, construction, electricity. One of them is the construction of the methanol plant in the country. Between the European Bank for Reconstruction and Development and the company AzMeCo (Azerbaijan Methanol Company) is signed a credit agreement worth 120 million US dollars, as well as a letter of intent to build in an area of 25 hectares in Garadagh, the methanol plant and 5 plants for the production of intermediate gases. IBA is involved in the project and has allocated a certain amount of money.

Besides all this, the International Bank of Azerbaijan intends to use the experience of Islamic banking and provide its range of services to the public. Now the great attention is concentrated on the Islamic banking. Thus, in UK are operating five Islamic banks, in the United States - two banks and in the near future is expected the emergence of them in a number of other Western countries: Italy, France and Sweden. In addition, 17 British banks and branches of foreign banks, operating in UK, have specialized branches - the “window”, providing Islamic financial services. The interest greatly increased to this subject in the terms of crisis.

“Given our traditional ties with the Islamic financial institutions, we will develop this activity, since the country has a demand for products and services structured in the alternative percentage basis” - noted in the bank.

The International Bank of Azerbaijan has already summed up the tender results to engage a consultant to create a specialized structure for the provision of products and services of Islamic banking.

The concluding session of the tender commission was held, which focused on the assessment and analysis of the proposals prepared by the working group on introduction of Islamic banking in IBA. According to the results the commission members voted unanimously for cooperation with a consortium of companies Salans, KPMG, Pinsent Masons and Dar al Shariah.

The jointly work of the consultant has already begun with working group of the Bank for the implementation of the project. The completion of the first stage of the project and the beginning of a specialized structure activity is planned for autumn 2011.