BANK OF BAKU
AUDITORS REPORT AND FINANCIAL
STATEMENTS AT
31 DECEMBER 1997 Note 1 - Principal activities
Bank of Baku (the "Bank") was formed on 14 February
1994 as Commercial Bank "Tugai". Per decision of the Banks
Shareholders the Bank changed its name to Bank of Baku on 10 February 1997. The
Bank re-registered as a closed-joint stock company on 27 August 1997. The Bank
possesses a general banking license from the National Bank of Azerbaijan, and
also a license for foreign currency operations, granted on 15 January 1997. As
of 31 December 1997, one shareholder owned 95% of the outstanding shares. The
remaining 5% are divided between four individuals.
The Banks office is in Baku. It had an average of nine
employees during the year and 22 employees at the end of the year. The Bank
accepts deposits from the public and makes loans, transfers payments within
Azerbaijan and abroad, exchanges currencies and provides banking services for
its commercial and retail customers.
The Azerbaijan banking industry is very competitive and the
industrys operations reflect uncertainty surrounding the future direction of
political, economic and regulatory policy in Azerbaijan. Interest rates in
Azerbaijan are therefore relatively high by international standards, reflecting
these risks.
At 31 December 1997, the Bank had accepted no time deposits
from customers. The stated interest rates on the Banks loans ranged from 11%
to 30% for freely convertible currency loans and 18% to 30% for Manat loans.
