NEW STAGE

In early spring, AccessBank announced a major increase in share capital and renewal of its shareholder structure, which included influential foreign investors and international financial institutions again. Both events improved the position of the bank, which is now in the top five of leading local banks, became a positive signal for the entire financial segment of national economy. Successful growth of AccessBank indicates a revival of foreign investors' interest in the banking business in Azerbaijan, and the end of passive post-crisis pause in this sector. A new stage of development begins.

New capital and new shareholders

In fact, none of the commercial banks of Azerbaijan, especially those working not only with businesses but also with individuals, had such an impressive growth of share capital after devaluation.

According to the chairman of the bank, Anar Hasanov, the bank began increasing the share capital in November 2018 and completed the process on February 28, 2019. "In close cooperation with the Chamber for Supervision of Financial Markets, AccessBank successfully increased the share capital to ₼118.5 million, including emission of new shares for new shareholders and the current founder, International Finance Corporation (IFC), as well as the redistribution of existing shares to new shareholders," A. Hasanov said.

So, the share capital of the bank reached ₼258 million. "In the second stage, we will increase the capital by ₼22 million thanks to subordinated debt instruments, and additional ₼22 million will be allocated for "conditional capital", which will be used in the future, if necessary," Hasanov said.

Remarkably, AccessBank has managed to attract enough influential foreign investors, which makes it even stronger than before. It is true that AccessBank was established as a bank with 100% foreign capital. However, given the global crisis of recent years, it is a real accomplishment for the entire banking sector of Azerbaijan to win the favour of international financial institutions such as the Asian Development Bank, European Investment Bank, as well as the long-standing support of the main founder, International Finance Corporation (IFC), which is part of the World Bank. At the same time, it is important that IFIs are focused not only on their interest in cooperation with a single bank, but also on participation in the economic processes in the country.

According to the representative of Asian Development Bank, George Rubli, his bank supports the expansion of the country's dynamic and sustainable financial services sector as a catalyst for inclusive growth. "The efforts made by ADB to recapitalize highlight the priorities that we agreed with the government of Azerbaijan, which is a shareholder of ADB. We support the expansion of a dynamic and sustainable financial services sector in the country as a catalyst for inclusive growth. AccessBank serves the bulk of the population, which plays an important role in the country's macroeconomics, and will continue to make a valuable contribution to the development and diversification of the economy."

AccessBank is being strengthened both by additional capital and new international shareholders representing the development units of the European Union, Switzerland, Austria, the Netherlands and all other countries that are members of the Asian Development Bank, as well as private investors from Europe.

According to Jerry Wu, the representative of IFC, one of the shareholders of the bank, the corporation expects to cooperate with new shareholders "to support the next stage of the bank’s growth in order to help increase financing for small businesses in Azerbaijan, creating jobs and economic development in the country."

It is worth mentioning that the former partners of AccessBank, European Bank for Reconstruction and Development, KfW and Access Microfinance Holding AG, sold their shares to LFS Advisory GmbH. However, according to the management of the bank, no fundamental changes are associated with this in the bank’s policy. No rebranding is planned either. In addition, a new Supervisory Board will be formed, which will reflect the new shareholder structure.

Third breath

According to A. Hasanov, in the near future the bank will overcome another negative consequence of the global crisis and restore profitability. "We plan to reach operating profit in the second half of 2019. As for the overall profitability, it is expected in 2020," the banker said.

The increase in share capital will lead to growth and the total capital of the bank. "We plan to fully take control of the loan portfolio remaining untouched since the devaluation. We will create additional reserves for this purpose. We are sure that this move will increase our total capital exceeding the minimum requirements and reaching about ₼70 million," Hasanov said.

By the way, a significant part of problem loans of the devaluation period will find its solution largely due to the recent decree of President Ilham Aliyev. "This decree was an important step towards solving problems faced by both the bank and customers. In general, the banking sector and citizens felt great support from the state," Hasanov said.

AccessBank has previously provided support to its clients who have faced problems after devaluation, offering them credit restructuring. After the presidential decree, this activity will receive a large scale, and the situation with toxic debts will improve significantly. This, in turn, will allow banks to increase their loan portfolio. However, according to A. Hasanov, in 2018 AccessBank issued new loans for ₼383 million, with 98% of these loans in national currency. As for the interest rate corridor, there is no fixed indicator on this account, since it also depends on other conditions for granting a loan - terms, availability of collateral, etc. But it is clear that all bank customers are interested in taking loans at low interest rates, but placing deposits at high interest rates. And within the framework of its new strategy, the bank will work to improve these conditions, its management assures.

The new four-year strategic development plan of the bank, which was developed together with new investors, assumes an active increase in the loan portfolio. After all, the bank was created in 2002 just as the Microfinance Bank (in 2008 changed its name to AccessBank) and its main mission was to support micro, small and medium businesses. According to A. Hasanov, in the future, this policy will not only be continued, but also substantially expanded. And this desire of the bank management is fully supported by the new shareholders. "The participation of the European Investment Bank in the recapitalization of AccessBank is part of our strategy to ensure access to financial resources for small and medium businesses. Small and medium enterprises are the basis of any economy, ensuring the employment of a significant part of the working population. EIB hopes that AccessBank will continue to develop its business and have a positive impact on the quality of life of ordinary people in Azerbaijan," EIB representative Jitka Bures.

By the way, microbusiness loans already make up a substantial part of the bank’s portfolio. So, last year this segment of economy was issued ₼216 million of loans, and this is 57% of all loans issued to microbusiness in Azerbaijan. Moreover, ₼70 million of them are loans to farmer households.

Since AccessBank has managed to maintain its branch base, it successfully continues to support agribusiness in the regions. As part of this strategy, AccessBank began cooperation with the Agency for Agrocredit and Development and starts issuing preferential loans at 7% per annum for up to ₼200,000 with a grace period of up to 12 months.

In a word, as Oleg Ivaniychuk, a representative of the responsAbility investment group, which in the past actively supported AccessBank as a lender and trusted partner, has now become a shareholder of the bank, a new stage in the development of the bank begins, and shareholders are ready to support AccessBank as a stronger, more efficient and innovative bank." And the renewed, strengthened AccessBank can cope with even greater success with the functions of supporting important areas of the country's economic development, contribute to improving the image of Azerbaijan's banking sector and increasing its credibility.

New shareholder structure of AccessBank

Asian Development Bank - 19.90%;

European Investment Bank - 17.39%;

International Finance Corporation - 16.56%;

Investment funds managed by responsAbility:

responsAbility SICAV (Lux) - 2.91%;

responsAbility Management Company S.A. - 7.11%;

Dutch Development Bank (FMO) - 9.41%;

Austrian Development Bank - 9.17%;

SIFEM AG - 8.89%;

EFSE - 2.78%;

Symbiotics SICAV (Lux.) - 2.27%;

GGF - 1.77%;

LFS Advisory GmbH - 1.27%;

Black Sea Development and Trade Bank - 0.58%