Serhat Köksal: BSTDB intends to finance profitable projects along Middle Corridor - INTERVIEW

Strengthening transport and logistics links between Europe and Asia, developing sustainable infrastructure, and expanding access to finance are becoming key drivers of economic growth in the Black Sea-Caspian region. Against this backdrop, Azerbaijan is consistently strengthening its role as a strategic hub in the Middle Corridor, while simultaneously promoting economic diversification and green energy transition projects.

Under these circumstances, the importance of international financial institutions, capable of not only providing long-term financing but also shaping new models of regional cooperation, is growing. The Black Sea Trade and Development Bank (BSTDB) plays a special role in this process, supporting infrastructure and investment projects in member countries and facilitating private sector development.

During a visit to Baku, BSTDB President Serhat Köksal spoke with Report about the bank's priorities in Azerbaijan, the projects being considered within the Middle Corridor and the green transition, and the prospects for expanding its financial presence in Azerbaijan.

Report presents the interview:

- Azerbaijan is preparing to host the 28th Annual Meeting of the Board of Governors of the Black Sea Trade and Development Bank in 2026. Have the preliminary dates already been determined? What key theme is planned to be placed at the center of the forum's discussions in Baku?

- We are planning to hold our Annual Meeting and Business Forum in Baku around late June or early July, and preparations have already begun. We are currently engaging with the relevant authorities as well as business organizations in Azerbaijan. A dedicated team from our side is also working closely with local business representatives to help shape the agenda and ensure that the event delivers maximum value. At this stage, topics that are particularly relevant for Azerbaijan - such as economic diversification and regional connectivity - are likely to feature prominently in the discussions. However, the agenda is still evolving as we continue our consultations.

Our main objective is not only to address the most pressing issues facing the region but also to ensure that these meetings lead to concrete outcomes and potential projects. We attach great importance to this process and are working intensively with our partners to make the meetings in Baku both meaningful and productive.

- Given Azerbaijan's growing role as a logistics hub between Europe and Asia, is the signing of new agreements or initiatives related to the development of the Middle Corridor or green energy and sustainable infrastructure projects planned within the framework of the meeting?

- Azerbaijan is very well positioned as a key corridor for energy, transport, and digital communications along the Middle Corridor. We are fully aware of the strategic importance of this route and the related projects for Azerbaijan, particularly in the current geopolitical environment. The Bank aims to support this development by potentially financing bankable projects along the corridor. Over the past week, our Banking teams have been meeting with various local counterparts to discuss important upcoming initiatives in Azerbaijan, including projects in renewable energy, telecommunications, transportation, logistics, and other priority sectors.

As you know, large-scale infrastructure projects require significant time to implement due to their complexity. We therefore hope to finalize some of these projects in the coming months and years.

- In September 2025, during the meeting with Azerbaijan's Minister of Economy Mikayil Jabbarov, you discussed BSTDB's participation in the country's strategic infrastructure projects. What specific areas are being referred to? Are projects in the field of port infrastructure, railways, logistics centers, or infrastructure reconstruction in the liberated territories being considered?

- The Bank is currently evaluating a number of opportunities in the renewable energy sector in Azerbaijan. We hope that these early discussions will lead to financed projects with strong local partners in the coming years. As a development bank, we give priority to infrastructure projects, and therefore, all the sectors you mentioned are important to us. We believe that the Public-Private Partnership (PPP) projects being prepared by the recently established PPP Department under the Ministry of Economy will allow us to become more actively involved in infrastructure development.

There have been very positive developments in this regard. Such projects are difficult to realize without strong government support. In this context, we greatly appreciate the strong backing provided by the Government of Azerbaijan in advancing several infrastructure projects prioritized under the PPP framework. We believe that the positive impact of this support will become increasingly visible in the coming years and will certainly be reflected in our portfolio in Azerbaijan.

- BSTDB has traditionally been an active supporter of the non-oil sector development. Which sectors, besides agribusiness and manufacturing, do you consider the most promising for financing in Azerbaijan over the next two years?

- As mentioned earlier, the most promising opportunities for the Bank are expected to emerge from projects developed under the Public-Private Partnership (PPP) framework, particularly in infrastructure sectors such as transport, green energy, utilities, water supply, and logistics.

- In recent years, the bank has successfully entered international capital markets with bond placements. Does BSTDB plan to continue raising market financing in 2026? Is the possibility of issuing bonds in the national currencies of member states, particularly in Azerbaijani manats, being considered?

- BSTDB is firmly committed to continued and expanding market financing in 2026 and beyond. The Bank's successful return to the international capital markets in February 2026 with a $350 million benchmark bond, which attracted over $2 billion in orders from a globally diversified investor base, signals BSTDB's intention to re-establish a consistent presence across selected capital markets, in line with its long-term funding strategy. Going forward, the Bank aims to maintain a balanced and diversified funding mix across multiple currencies, formats, and maturities, calibrating its market activity to its evolving funding needs. Regarding bonds in national currencies of member states, and specifically in Azerbaijani manats, such issuance remains strategically on the table and is viewed as a natural extension of the Bank's activities.

- In this regard, is the bank considering the possibility of providing credit lines in manats to reduce currency risks for Azerbaijani entrepreneurs? Are there plans to expand the network of partner banks in Azerbaijan, or will the main focus be on increasing limits for existing financial institutions?

- The Bank is exploring all the options mentioned above. In fact, BSTDB is actively working on deepening its presence in the financial market of Azerbaijan. This includes repetitive business with existing partner banks, but also establishing or re-establishing relationships with new partners. We are considering new financing to support trade finance and SME lending through a number of banks. Some of the facilities were and will be made available in local currency, and their share has been growing in recent years. Hopefully, we will be able to increase our access to the local currency so that we can continue offering resources with no exchange risk to banks and companies in the country.

- The BSTDB Medium-Term Strategy for 2023-2026 envisaged an important phase of increasing the bank's subscribed capital. How do you assess the current progress of this process? Can it be said that the formation of the new capital base is practically complete and the bank is ready for a more active scaling-up of operations?

- The capital increase experienced some delays because of the broader geopolitical situation in the Region, but it is now approved, and capital payments will take place in eight equal installments beginning in 2027. The increase was oversubscribed, which is an indication of the strong commitment of the shareholders to the institution and their willingness to continue to promote economic development and cooperation in the greater Black Sea Region.

- Given the large-scale investment needs of the region - from the development of transport corridors to energy transition - is the Board of Governors considering the possibility of a new round of capital increase for the bank within the next 2-3 years?

- Given that the Bank is expecting payment of capital over the next eight years, from the recently completed capital increase exercise, we do not foresee having a new round in the coming 2 to 3 years.

- Azerbaijan is traditionally considered one of the most disciplined shareholders of BSTDB. Has the country fulfilled all its obligations for share payments under the latest capitalization phase to date?

- As already noted, payments are due to begin in 2027. Azerbaijan has always paid its commitments in full, and over the years has gradually increased its shareholding stake in the Bank from 2% to 5%. We fully expect it to meet its commitments from 2027 to 2034.