Deposit Rates
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€ / £ (per annum) | |||
| Term | Monthly interest | Annual interest | End of term interest | Monthly interest |
| 60 months | 15.2% 16.3% AER* | 16.0% | 19.0% | 13.2% 14.0% AER* |
| 48 months | 14.4% | 15.2% | 17.4% | 12.0% |
| 36 months | 13.6% | 14.4% | 15.8% | 10.8% |
| 24 months | 12.8% | 13.6% | 14.2% | 9.6% | 12 months | 12.0% | 12.8% | 12.8% | 8.4% |
* AER = Annual Equivalent Rate
Free MasterCard Gold or VISA Gold - Credit limit of 70% of the deposit amount.
Note penalty for early redemption "If the agreement is terminated by the Customer for any reason at any time, interest accrued on the deposit shall not be paid. The interest accrued and received by the Customer earlier shall be deducted from the total amount of the deposit".
Note: There is no withholding tax on interest earned.
One's initial incorrect reaction may be a) Is Azerbaijan an unstable CIS state, previously at war with its neighbour? b) Who would trust a hole-in-the-wall bank? In truth, this is the dominant bank in the world's fastest growing oil-based economy.
About the Bank
International bank of Azerbaijan was established in 1992, shortly after the demise of the Soviet Union. It is the country's dominant bank with 53% of all deposits, 10 times larger than its nearest competitor. The bank has some 500,000 private customers and 32,000 corporate clients. It employs 1,400 staff at 75 branches with at least USD 2 billion assets. It has representative offices in several EU nations.
Fitch in September 2007, issued an international rating of default for the International Bank of Azerbaijan a "BB+" and short-term rating "B" with outlook "Stable". This rating reflects the higher capability of the Azerbaijan authorities to support the bank if necessary, which is verified by recent increase of Azerbaijan to "BB+".
Moody's Investors Service International has assessed the long-term IBA rating in foreign currency at Ba2 and short-term at Not Prime (NP).
The bank has not yet been rated by Standard & Poor's
The bank's Eurocurrency loan clients are mainly corporations developing the oil industry, who prefer to pay high credit rates for longer term loans than share equity with foreign corporations. Hence the bank offers high deposit rates, especially for longer term certificates of deposit.
The bank owns the largest insurance and telecommunication companies, and owns 6% of the local stock exchange. It has branches in several former CIS states as well as representative offices in London and Frankfurt.
About the country - Azerbaijan
An oil-based economy contributing at least a third of its GDP. Hitler unsuccessfully tried to capture the Azerbaijan oil fields via Stalingrad. Significant reserves lie under the Caspian sea, including newly found gas fields. European and Far East nations, eager to find alternate supplies from Russia are clamoring to sign up oil supply contracts. Western firms help pump 1 million barrels per day, expected to quadruple over next few years. GDP has grown some 35% annually for the past few years, pushing inflation to 15%. The medium term outlook is optimistic as its oil reserves will last at least 30 years, its willingness to allow foreign companies to invest new oil extraction techniques, its newly functioning oil export pipeline to Turkey and planned extentions to Italy and Greece. Its unresolved territorial conflict with Armenia, inadequate Soviet-era infrastructure and outdated references to corruption, has discouraged some foreign investment.
International Credit Ratings
Moody's assigns Azerbaijan a foreign and local currency issuer rating of "Ba1", one notch below investment grade, citing "little government debt and rising revenues from oil exports. The former Soviet state bordering the Caspian Sea and Iran has excellent medium-to-long term prospects for surpluses on the current account and consolidated budget balances based on a rapid expansion of oil production and exports. The windfall from oil profits is expected to swell government coffers, expand official and oil fund foreign currency reserves significantly and shrink the country's already low debt ratios." Fitch has international credit rating for Azerbaijan of "BB+" long-term and B short term. Standard & Poor's has not yet rated Azerbaijan.
Interest Rate Outlook
Fitch states "While capital from the ongoing oil boom will continue to be the key factor lifting the manat (local currency), we expect hot money inflows from foreign investors eager to take advantage of the emerging local debt market to also act positively on the currency over the medium term". German Commerz bank has just opened a representative office and states “Azerbaijan has rich resources, competitive environment and high speed of economic growth. These three factors became the basic ones for our arrival in Azerbaijan”. As foreign exchange flows into the country, one can assume that the high interest rates would begin drop over the next few years. For example, five years ago, both Russia and Kazahkstan banks offered at least 10% for USD deposits. Today, banks in those countries offer no premium over USA Fed rates as they no longer suffer foreign exchange shortages.
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