Wednesday, June 9 2010 19:10

ArmInfo. The European Fund for Southeast Europe (EFSE) has signed an agreement with Converse Bank for providing the bank with $10mln loan for developing small and medium-sized business. The signing ceremony took place during EFSE's annual meeting in Ohrid (FYR Macedonia).

This is EFSE's first loan in Armenia.

Chairman of the Board of Converse Bank Tigran Davtyan says that this year EFSE is ready to provide $15mln for SME support and there are relevant agreements. However, for the moment Converse Bank is planning to place $10mln. In the framework of EFSE's policy to actively support business in Southeast Europe, Converse Bank will be able to credit small and medium-sized enterprises on a long-term basis with the maximum size of a loan per borrower to be 100,000 EUR. Thereby, the fund will satisfy the long-term financial demand of stably operating private companies.

During the meeting Karapet Gevorgyan, Armenian representative of KfW (one of the founders of EFSE), said that Armenia joined the fund Dec 16 2009, together with the other South Caucasus states and Belarus. A few days ago the Investment Committee of EFSE decided to sign seven agreements with different banks, including a credit agreement with Converse Bank. "It is very important that EFSE has de facto started lending activities in Armenia. I hope that 1-2 more deals will be signed with Armenian banks this year," Gevorgyan said. He said that the key problem is that the money is provided in EUR and USD. "Even
though EFSE does not stipulate the currency of its lending projects, hedging against currency fluctuations by foreign hedge funds makes AMD resources more expensive and less competitive," Gevorgyan said.

EFSE was established in 2005 and is one of the world's biggest micro-financial funds. In the next five years the fund is planning to provide the financial institutions of European Partnership member-states with a total of 900mln EUR. As of today, the investment portfolio of the fund totals 580mln EUR. 76% of it is direct loans to banks and financial organizations, 20% - subordinated loans, 3% - hybrid capital, 0.8% - participation in capital. 79% of the money has
been provided for business support, 21% - for purchase of housing mostly in the European regions with high percentage of refugees. The fund also provides its partners with substantial technical assistance for enhancing their institutional capacities with as much as 47mln EUR or 50% of the fund's profit spent on this activity.

Chairman of EFSE's Board Claus Glaubitt said that the activities of the fund are based on a good example of state-private sector partnership and are aimed at ensuring long-term economic development in Southeast Europe rather than at gaining profit.

Among the strategic investors of the Fund are the European Commission, the Federal Ministry for Economic Cooperation and
Development of Germany, the governments of Austria, Switzerland, Denmark and Albania, KFW, IFC, EBRD, Deutsche Bank and other governmental and private companies and organizations. The activities of EFSE are based on the concept of responsible banking and is aimed at financing micro, small and medium-sized business, issuing mortgage loans, funding renewable energy and power efficiency enhancement projects. The lending is carried out via 58 banks of partner-states. This helps the banks to improve their technological and infrastructural capacities.

According to the Ranking of the Commercial Banks of Armenia prepared by the Agency of Rating Marketing Information (ArmInfo), as of Apr 1 2010 the share of credits in Converse Bank's assets made up 61% or 48.8bln AMD ($122mln) - 7th place in Armenia's banking system. The capital totalled 12.6bln AMD, the authorized capital - 1.3bln AMD, the assets - 80bln AMD, the credit portfolio - 49bln AMD, the obligations - 67.4bln AMD. In ROE Converse Bank is the 2nd, in ROA - the 5th. In Q1 2010 the net profit of the bank was 625mln AMD. The shareholders of Converse Bank are Advanced Global Investments,
controlled by Argentinean businessman Eduardo Eurnekian (95%), and the Mother See of the Armenian Apostolic Church 5%).