International Bank of Azerbaijan sells its subsidiaries in Russia and Georgia

The  International Bank of Azerbaijan (IBA), which is undergoing the procedure of voluntary restructuring of its loan liabilities to external lenders, started sales of its foreign assets.

The bank said at its presentation organized for creditors that within this process the IBA internal reorganization implies the sale of subsidiary banks in Georgia and Russia.

"The Bank intends to carry out it in 2017. The sale of government’s equity stake is scheduled for 2018," abc.az cited the IBA as saying.

The country's government has taken up a constructive approach in the process of voluntary restructuring of liabilities of the IBA to its external creditors.

A source, which is close to the Azerbaijani government, said that sale of IBA subsidiary banks in Georgia and Russia aims also to provide additional guarantees of preservation of capitals of those banks’ clients, regardless of progress of IBA debt restructuring.

"Restructuring can develop anyhow - the IBA lenders have not yet signed under the restructuring plan. Today, there is still the risk that the IBA will have to hold longer-than-planned negotiations with them and even to sue for the debt repayment. Under such circumstances the withdrawal from the possible arrest and penalties for others’ debts banks at IBA-Georgia and Bank IBA-Moscow is not just the discretion but the duty to their clients," the source noted.

Azerbaijan invited several schemes to the IBA foreign lenders on restructuring of the debt, equal to $3.34 billion. In accord with the first option, the debt with 20% discount is exchanged for sovereign bonds of Azerbaijan in the amount of $2.38 billion with 12-year period and a coupon of 5.125%. In accord with the second option exchange is carried out on par value for 15-year sovereign bonds with a coupon of 3.5%. The third option says that the debt is exchanged for new 7-year IBA bonds with a coupon of 3.5%.

IBA-MOSCOW bank (one of the stable banks in the Russian Federation) operates in Russia and IBA-Georgia operates in Georgia.