During the 20-year dynastic reign of Azerbaijan's autocratic president, Ilham Aliyev, his relatives have amassed enormous wealth thanks in part to lucrative state contracts in major sectors, including natural resources, air travel, and construction.
Banking has also served as a significant source of wealth for Azerbaijan's first family, with Aliyev's daughters and other relatives controlling billions of dollars in assets in privately held lenders.
And their dominance in banking is only growing, a new RFE/RL investigation has found.
Four banks owned in whole or in part by the Aliyevs have increased their combined share of the Azerbaijani banking sector's assets nearly threefold since 2015, when a government devaluation of the nation's currency, the manat, in the face of plummeting oil prices wiped out savings and triggered public panic, the investigation by RFE/RL's Azerbaijani Service found.
The four lenders -- Pasha Bank, Kapital Bank, Xalq Bank, and Bank Avrasiya -- have also become the largest combined servicers of loans allocated under a government program to boost business, accounting for hundreds of millions of manats.
The combined assets of the Aliyev banks skyrocketed from 4 billion manats ($5.1 billion prior to devaluation) in 2015 to 20 billion manats ($11.8 billion at current exchange rate) by the end of 2022, according to an RFE/RL analysis of their most recent annual financial reports. Their combined share of the banking sector's assets rose from 16 to 43 percent during that same period.
Azerbaijan's antitrust legislation defines a market share of over 35 percent as dominant and potentially subject to intervention to counteract budding monopolies, though a local economist, Natiq Cafarli, told RFE/RL that those laws have never been used.
These banks' combined share of the sector also now exceeds that of state-owned lenders, which control some 30 percent of all banking assets in the country, down from 38 percent in 2015.
The presidential couple in Turkey in June
Meanwhile, nearly two dozen competitors disappeared from the sector in the wake of successive devaluations of the manat and a January 2015 move by Azerbaijan's Central Bank raising the minimum consolidated capital required for banks to operate fivefold, to 50 million manats ($64 million).
A portion of the Aliyev-linked banks' dramatic rise in a span of eight years is attributable to the effects of a devalued currency; but those four institutions have also been gobbling up assets far more quickly than their competitors.
They have also been helped by low-interest state credits issued under a development fund for entrepreneurs that the lenders have flipped into lucrative loans to the public.
Banking analysts have raised concerns that preferential treatment from the state has vaulted the Aliyevs' banks ahead of less politically connected rivals and helped create a de facto oligopoly that means less choice and more expensive loans for businesses and the public.
Aliyev, 62, has tightened his grip on the dynastic oil- and gas-rich Caucasus nation since taking over from his ailing father in 2003. He has called a snap presidential election for February 7 that he is almost certain to win, given Azerbaijan's restrictive legislative and political environment, and that would give him a new seven-year term.
Two decades into Aliyev's rule, Azerbaijan ranks 157th out of 180 countries in Transparency International's latest Corruption Perception Index, and the U.S. State Department has said that "a small group of government-connected holding companies dominates the economy."
RFE/RL's Azerbaijani Service reached out to all four of the Aliyev-linked banks in this report for comment. Only Kapital Bank responded in time for publication, attributing its growth in part to an expansion of its online banking services and other technological tools.
Asked about the loans it disburses originating from the state development fund for entrepreneurs, Kapital Bank referred the inquiry to the "relevant state authorities."
Rising Fortunes, Faltering Rivals
In October, after 20 years on the market, Baku-based Muganbank became the latest lender to have ceased its operations in Azerbaijan when the Central Bank revoked its license over capital-adequacy requirements. Five months earlier, another local institution, Gunay Bank, was similarly shut down.
Their demise raised the number of failed banks to 22 in the eight years since capital-adequacy requirements were tightened and falling oil prices contributed to a devastating currency crisis, accounting for nearly half of the 45 banks that were operating in early 2015.
Ali Alirzayev, a former deputy chairman of the parliament's Economic Policy Committee and a member of Aliyev's ruling New Azerbaijan Party, downplayed the winnowing of the sector in comments to RFE/RL's Azerbaijani Service.
"In a dynamic market economy, companies must adapt to market forces," he said. "It's not about analyzing or laying blame elsewhere; it's the law of the market. We shouldn't fixate on a static number like insisting that if there were 45 banks before, there must always be 45."
The first family visits the tomb of patriarch Heydar Aliyev in May 2023.
But as a result of the past decade of consolidation, three of Azerbaijan's top five banks by assets -- Pasha Bank, Kapital Bank, and Xalq Bank -- are controlled by Aliyev's two daughters along with relatives of the first lady, Mehriban Aliyeva, who has also served as first vice president since 2017.
The audited financial reports of all three of those banks, which are publicly available, list Leyla and Arzu Aliyeva along with their grandfather and Mehriban's father, Arif Pashayev, as the ultimate owners.
In the case of both Pasha Bank and Kapital Bank, they are joined by another co-owner, Camal Pashayev, who is Mehriban Aliyeva's cousin. The stakes are in both cases held through Pasha Holding, one of Azerbaijan's biggest conglomerates, with assets in the financial, construction, and tourism sectors, or through subsidiaries or other companies.
A fourth bank ultimately controlled by Aliyev family members, Bank Avrasiya, failed to disclose its ultimate beneficial owner or owners. But RFE/RL's Azerbaijani Service has learned that Pasha Holding holds an indirect 37.5 percent stake in Bank Avrasiya through a subsidiary called PMD Group.
A former Tax Ministry official named Asraf Kamilov, whom the 2021 Pandora Papers leak revealed as a business associate in the Aliyev family's secretive offshore empire, was the legal representative of the owner of another 25 percent stake in Bank Avrasiya called Azbiznescom.
The Aliyev Family's Secretive Offshore Wealth
Multiple media investigations, including by RFE/RL's Azerbaijani Service, have revealed that Aliyev's immediate family members control a vast portfolio of assets outside Azerbaijan, in many cases through secretive offshore companies in which close associates are also involved.
A 2021 investigation by the Organized Crime And Corruption Reporting Project (OCCRP) based on the Pandora Papers leak found that Aliyev's family and their associates used offshore firms to secretly acquire real estate in Britain, almost entirely in London, worth nearly $700 million in total.
Following that report, Aliyev himself made a rare public comment on investigations into his family's wealth, claiming what "was written in the papers...is maybe 5 percent" true.
Aliyev defended his family's wealth, saying he transferred his assets to his children upon becoming president.
"They made efforts and continue their business. They have investments mainly in Azerbaijan. They have investments outside of Azerbaijan. All their business activity is transparent, internationally audited and there is nothing that anybody can claim wrong," he said in an interview with the Italian newspaper La Repubblica, according to a transcript posted on the presidential website.
The Aliyev-linked banks' mounting dominance is even more pronounced if state-owned institutions are excluded. In that case, their nearly $12 billion balance sheets by the beginning of 2023 represented 63 percent of all private banking-sector assets.
They showed combined profits of more than 486 million manats ($285 million) in 2022 and 500 million manats ($294 million) in 2023, according to the most recent figures from the Central Bank of Azerbaijan.
Akram Hasanov, a former banker and lawyer in Baku who helps individuals in disputes with banks, drew a direct line between Central Bank lending early in the crisis and the Aliyev-linked banks' rapid growth.
"The Central Bank gave very cheap loans to [some] banks" in the years preceding the [2015] devaluations, Hasanov told RFE/RL's Azerbaijani Service. He added that such loans don't appear to have been made available to all banks and were frequently allocated with little transparency.
Hasanov said he personally raised the question of alleged favoritism with Taleh Kazimov in April 2022, shortly after Kazimov, a former Pasha Bank chairman, was appointed to head the Central Bank. Kazimov insisted that loans had been extended equitably to all banks, Hasanov told RFE/RL.
The Azerbaijani Central Bank did not respond to RFE/RL requests for detailed information about its specific loans or the processes and conditions under which they were granted.
But Mahmud Mammadov, the former head of Gunay Bank, criticized the Central Bank for closing his bank after it lost its license in May 2023.
"There were banks that got loans of 500-600 million manats, and they were too stingy to give us a loan of even 1-2 million manats," Mammadov told local media that month. Contacted by RFE/RL, Mammadov declined to elaborate on that claim.
Borrow Low, Lend High
In addition to official functions in distributing salaries to civil servants and paying utility bills, the Aliyevs' banking empire plays a central role in disbursing government-funded loans to local entrepreneurs, RFE/RL's Azerbaijani Service has also learned.
The Azerbaijani Economy Ministry's Entrepreneurship Development Fund (EDF) allocates loans at favorable terms and had a total balance sheet of 952 million manats ($560 million) with 699 million manats ($411 million) in loans to credit institutions at the end of 2022.
The Aliyevs' banks' financial reports show that those institutions were charging local entrepreneurs and other borrowers between 5 and 7 percent interest on EDF loans provided at 1 percent interest. They show that by the end of 2022, more than half of the EDF's lending was disbursed through the Aliyevs' banks.
Income from interest payments across the Azerbaijani banking sector totaled 3.5 billion manats ($2 billion) in 2023, according to the most recent Central Bank data. The Aliyevs' banks accounted for 38 percent of this total, or 1.3 billion manats ($765 million).
Some businesspeople say they're not benefiting from such lending projects and question the fund's methods.
Sahin Nacafov, a farmer who lives in Baku but whose farm is in Samkir, in western Azerbaijan, told RFE/RL that he spent six months meeting with banks before being rejected for one of the so-called concessional loans. He said the banks insisted on collateral based in the capital, Baku.
"I'm a regional farmer," Nacafov said. "Why should someone living in a village have something in Baku? And because of that, as an entrepreneur, I can't have these loans?"
Leyla (left) and Arzu Aliyeva attend the taekwondo finals at the Baku 2017 4th Islamic Solidarity Games at the Baku Sports Hall in Baku in May 2017.
Another farmer, Qeybulla Mammadov, from the village of Rustov in the northeastern Quba region, has complained that such concessional loans aren't trickling down to his business or those of his neighbors either. He told RFE/RL that he's been seeking such a loan for more than a year and a half, so far unsuccessfully.
Moreover, independent economist Allahverdi Aydin warns, interest payments could become another conspicuous problem.
The Central Bank says interest rates on consumer loans currently average 16 percent. Independent experts, however, believe that the actual average is higher.
Citizens already have difficulties repaying existing loans, and the emerging monopoly won't make things any easier, Aydin says.
"If banks close down, then the banks belonging to the ruling family will further increase their market share," Aydin said. "Customers of closed banks will also flock to those banks...and citizens won't have any alternative."