International Bank of Azerbaijan restructuring proceedings launched

New York, May 11 – OJSC International Bank of Azerbaijan began proceedings for a voluntary restructuring of its obligations in the Nasimi District Court in Baku City, Azerbaijan.

Creditors will be asked to approve a plan which will exchange the bank’s senior and junior foreign currency obligations for direct sovereign obligations of the Republic of Azerbaijan.

While the restructuring is under way, the bank has suspended all payments of principal and interest except for trade finance facilities.

The bank did not make the principal and interest payment due on May 10 on a $100 million subordinated loan owed to Rubrika Finance Co. Ltd.

Depositors will not be affected and the bank will continue business as usual.

A presentation to investors is scheduled for May 23.

The bank has retained Lazard Frères as financial adviser and White & Case LLP as legal adviser.

The bank said it is currently finalizing its financial statements for 2016 and expects these to show a net loss of approximately AZN 1.9 billion for the year.

It attributed the loss to a negative net interest margin, foreign exchange losses due to the continued devaluation of the Manat and increases in provisions in both its retail and corporate loan portfolios.

The tier 1 capital ratio at Dec. 31, 2016 is expected to be negative 4.70%.

The restructuring began on May 4.

International Bank of Azerbaijan is based in Baku, Azerbaijan.

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