ADB Supports Ipak Yuli Bank in Uzbekistan
Friday 26 October 2012
MANILA (ADB press service) – The Asian Development Bank (ADB) is investing up to US $6 million in Ipak Yuli Bank, one of Uzbekistan’s leading mid-sized banks, a move meant to contribute to private sector development by helping extend credit to worthy small businesses. This will be ADB’s first equity investment in a bank in Uzbekistan.
- Ipak Yuli is a universal bank with a niche market of rapidly growing micro, small and medium-sized enterprises. As of end-2011, the bank’s loans to small and medium-sized enterprises represented more than 62% of its total loan portfolio, while microfinance accounted for more than 12%.
“At this critical point in the development of Uzbekistan’s banking sector, this will help strengthen financial intermediation and promote confidence,” said Philip Erquiaga, Director General of ADB’s Private Sector Operations Department. “The investment will also help entice foreign investments in Uzbek banks.”
ADB will acquire approximately 15% of the issued capital of the bank through an issuance of new shares, which it will use to provide much-needed financing to meet the demand of growing small businesses. ADB will also help the bank strengthen its operations, particularly in the areas of internal controls, corporate governance, risk management, credit risk management, anti-money laundering and anticorruption measures, and environmental and social safeguards.
Uzbekistan’s banking system is still at an early stage of development. Its penetration rate is low and financial intermediation function is limited. The sector accounted for only 35.3% of the country’s gross domestic product in 2011.
ADB undertook a review of private commercial banks in Uzbekistan, and after performing due diligence, decided to pursue an equity investment in Ipak Yuli Bank, which currently has 10 branches and 62 express centres throughout the country.