International Bank of Azerbaijan: Why the South Caucasus's largest bank has requested restructuring?

Abstract

This research paper consists of six sections: introduction, four major chapters, results and, finally, a short series of questions remaining after conducting the research. The first part contains a brief presentation of relevant information, such as the history of the development of IBA and its importance in the banking sector of Azerbaijan. The goal of the first section is to provide background information about the subject of the research. In the second part, the bank's macroeconomic financial indicators (assets, liabilities, capital and so on.) for the period 2001-2016, and its trends of periodic development have been analyzed. Taking into consideration that the manat’s devaluation is the main factor which makes the bank’s problems worse and uncontrollable, the third part of the study covers the quality of financial flows, bank assets and liabilities, cash flow, loan portfolio, customer account dynamics, and periodic impacts of government support, exploring the situation to understand the actual outcomes. In the fourth part, the government's restructuring plans and the actual financial condition of IBA have been compared. Meanwhile, significant factors, such as the level of liquidity, asset quality, and grouping of debt maturity, were assessed for the time when the bank requested restructuring. The goal was to identify the reasons for the necessity of restructuring. Thus, as a result of the analysis, it was found that, in fact, the liquidity level of IBA allowed for the execution of liabilities without restructuring.