FIF - Bank Respublika MSME Loan IV (EFSD+P3)

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Overview

A senior unsecured synthetic AZN loan, denominated in USD, of up to USD 10 million, to be provided under the Financial Intermediaries Framework ("FIF") in a single tranche, for on-lending to private MSME clients of BR operating in Azerbaijan.

Project ID 56293

Status Signed

Location

Azerbaijan

Business Sector

Financial Institutions

Notice Type

Private

Project timeline

Exploratory
Passed Concept Review
Passed Structure Review
Passed Final Review
Board Approved
Signed
Implementing
Completed

Company Contact Information

Aslan Abasov
Aslan@BankRespublika.az
+994 (12) 598 08 00
http://www.bankrespublika.az
Khagani str., 21, AZ1095, Baku, Azerbaijan

Project ID 56293

Status Signed

Location

Azerbaijan

Business Sector

Financial Institutions

Notice Type

Private

Environmental Category

Approval Date

08 Apr 2025

Disclosure date

15 Apr 2025

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Project Description

Project Objectives

Pursuant to the FIF objectives, the proposed sub-operation will provide medium-term local currency funding to private MSMEs in Azerbaijan, with a specific emphasis on rural areas. In line with EFSD+ requirements, at least 65% of the sub-borrowers will operate outside of the capital.

Transition Impact

ETI score:68

proposed MSME loan contributes to the objectives of the Financial Intermediary Framework (FIF), supporting Inclusive and Competitive transition qualities.

Inclusive: The Project improves access to finance for under-served market segments, improving their financial inclusion with demonstrably high need and outstanding effectiveness.

Competitive: Project will expand Bank Respublika's MSME portfolio, with a focus on reaching regional clients and attracting new clients.

Client Information

BANK RESPUBLIKA OJSC

OJSC Bank Respublika ('BR') is a private medium-sized bank in Azerbaijan ranking 4th out of 20 private banks (or 5th out of all 22 banks) by assets with market share of c. 4.1% as of YE24. It became a Systemically Important Bank ("SIB") since March 1, 2024, sharing this status with Top 4 banks. Headquartered in Baku, BR has a network of 35 branches and 1 outlet, and employs ca. 1,805 people. It is rated by Moody's, with the baseline credit assessment rating affirmed at B2 (outlook "N/A") and long-term deposit rating upgraded from B2 to B1 (outlook "positive") in July 2024.

EBRD Finance Summary

USD 10,000,000.00

Total Project Cost

USD 10,000,000.00

Additionality

The loan's additionality would stem from:

Financing Structure:

EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions, e.g. a (grace period and local currency). Such financing is necessary to structure the project.

Standard-setting: helping projects and clients achieve higher standards:

MSME policy statement, Environmental and Social (E&S) requirements and financial covenants will ensure proper use of loan proceeds, adherence to the best E&S practices and prudent financial risk management.

Innovative financing structures and/or instruments:

EBRD offers an innovative financing structure (risk sharing) on commercial terms not available from other banks.

Environmental and Social Summary

Categorised FI (ESP 2024) Bank Respublika's (BR) is an existing client of the Bank and has demonstrated satisfactory environmental and social (E&S) performance under its current exposure. The proceeds will be used for on-lending to MSMEs in line with the eligibility criteria defined in the respective FIF Policy Statements and EFSD+ Programme, Product 3 requirements, which is considered low-risk from an Environmental and Social (E&S) perspective.

BR is committed to environmental and social (E&S) responsibility, which is integrated through a structured Environmental Management System (EMS). BR's E&S management system broadly complies with E&S Requirements (ESRs) 2, 4, and 9. It has a documented Environmental Management Policy, designated staff responsible for managing E&S issues, well-integrated E&S risk management procedures within the credit appraisal process, and robust monitoring mechanisms for E&S issues at the portfolio level and within the institution. BRs E&S management system is applied to the entire loan portfolio. Additionally, in 2024, the Company became an active participant in the United Nations Global Compact and committed to upholding the Compact's ten principles, which encompass human rights, labour standards, environmental protection, and anti-corruption measures.

BR is expected to maintain its E&S management system to effectively assess, manage, and monitor the E&S risks and impacts associated with its subprojects. It should align its approach with the EBRD's guidance for SME financing and comply with E&S Requirements (ESRs) 2, 4, and 9 under the 2024 ESP, including the exclusion list. It should also align with the EBRD's E&S Risk Management guidance and submit Annual E&S Reports to the Bank detailing compliance with applicable ESRs and addressing any E&S issues arising during the year.

Technical Cooperation and Grant Financing

Technical Cooperation (TC): None

Co-investment grants / Concessional Finance (Non-TC): The project will benefit from the European Fund for Sustainable Development ("EFSD") Plus Programme, Product 3 in the form of guarantee (8% net first loss risk cover in favour of EBRD).

Company Contact Information

Aslan Abasov
Aslan@BankRespublika.az
+994 (12) 598 08 00
http://www.bankrespublika.az
Khagani str., 21, AZ1095, Baku, Azerbaijan

PSD Last Updated

15 Apr 2025

Understanding transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with the EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and its associated Environmental and Social Requirements (ESRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the ESRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation, and to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about the environmental and social (E&S) performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD also requires its clients to disclose information, as appropriate, about the risks and impacts of projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all of the Bank's activities in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The EBRD believes that identifying and resolving issues in the project assessment and approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts andhelps to monitor integrity risks in projects post-investment.

OCCO is further responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, either within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. OCCO will follow-up all matters reported. It will review all matters reported. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP, which entered into force on 1 January 2025, sets out how the EBRD discloses information and consults with its stakeholders to promote better awareness and understanding of its strategies, policies and operations. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (for example, through the client’s project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the mechanism is: to support dialogue between project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or the project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate and how to submit a Request for review. Alternatively, contact IPAM by email at ipam@ebrd.com for guidance and more information on IPAM and how to submit a request.

Environmental and Social Documentation is not available for this project.

Selected procurement notices related to this project may be shown below. Further procurement opportunities related to this and other projects, if available, maybe be viewed in the EBRD Procurement Portal.

The EBRD's Environmental and Social Policy (ESP), Access to Information policy (AIP) and Project Accountability Policy (PAP) enable sound and sustainable development in its projects. The Independent Project Accountability Mechanism (IPAM) deals with complaints about environmental, social and disclosure matters related to the Bank’s investments.

No complaints about this project have been made so far.

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FIF - Bank Respublika MSME Loan IV (EFSD+P3)

Overview

Project timeline

Company Contact Information

Project Description

Project Objectives

Transition Impact

Client Information

EBRD Finance Summary

Total Project Cost

Additionality

Technical Cooperation and Grant Financing

Company Contact Information

PSD Last Updated

Understanding transition

Business opportunities

General enquiries

Environmental and Social Policy (ESP)

Integrity and compliance

Access to Information Policy (AIP)

Independent Project Accountability Mechanism (IPAM)