BAKU, Azerbaijan, July 3. The European Bank for Reconstruction and Development (EBRD) has approved a senior unsecured loan to Azerbaijan's Bank Respublika under the Financial Intermediaries Framework (FIF) program for up to $7.5 million in the equivalent of 6.9 million euros, Trend reports.
According to the EBRD, the loan is designed to support private micro, small, and medium enterprises (MSMEs) in Azerbaijan. It aims to expand the bank's medium-term local currency funding base and address existing gaps in line with Azerbaijan's strategic priorities, particularly targeting underserved segments.
Following the successful utilization of two previous MSME loans, this new loan will be the first to include a Green Economy Transition (GET) component, comprising 50 percent of the total amount.
The EBRD's statement highlights that this loan introduces an innovative green finance instrument. This instrument incorporates climate, environmental, social, and governance (ESG) standards, along with climate and ESG risk factors.
The EBRD also offers an innovative financing structure, incorporating risk sharing on commercial terms that are not available from other banks. The project will benefit from the European Fund for Sustainable Development Plus (EFSD+) program, which provides a guarantee covering the risk of a net first loss of 17 percent to the EBRD.
To note, Bank Respublika is a private bank in Azerbaijan, ranking 5th out of 23 banks in terms of assets and deposits, with a market share of about 4.2 percent as of the end of 2023. In August 2023, the international rating agency Moody's upgraded the bank's rating from B3 to B2 with a Stable outlook.