Monday, October 25 2010 15:39
EBRD extends new local currency financing in Armenia: up to US$ 12 million loan in local currency to ACBA-Credit Agricole Bank
ArmInfo. The EBRD is increasing the availability of local currency financing to private businesses in Armenia, with a synthetic loan in Armenian Dram (AMD) equivalent to up to US$ 12 million to ACBA-Credit Agricole Bank for on-lending to micro, small and medium-sized enterprises (MSMEs), the EBRD press-service reported.
Affiliated to Credit Agricole, the second largest French banking group, ACBA-Credit Agricole Bank, is a key player in Armenia's banking system and one of the leading banks in the microfinance segment, with a strong presence in the country's regions.
Under the synthetic loan structure, the EBRD is providing the financing in US dollars, while ACBA-Credit Agricole Bank's loan obligation is the AMD value of the provided funds. The synthetic loan, a cost- effective tool, helps the institution to manage its foreign exchange risk, to increase the term of its local currency funding, and to expand its portfolio of local currency loans, particularly needed in rural areas of the country where local businesses earn their revenues primarily in Dram.
Under the EBRD's A/B loan structure, the Bank will retain US$ 9 million on its own account, with the remaining US$ 3 million syndicated to Dexia Micro-Credit Fund, managed by BlueOrchard, a leading commercial microfinance investment company based in Switzerland.
The EBRD funds will support ACBA-Credit Agricole Bank's strategy to expand its rural and MSME loan portfolio to meet the growing demand for financing from small businesses. In addition, the loan will assist the bank in diversifying its funding base.
"We are pleased to continue our successful cooperation with ACBA-Credit Agricole Bank. Through this transaction the EBRD is reinforcing its commitment to support the development of small businesses in Armenia with much needed funds at a time when access to financing remains constraint", said Henry Russell, EBRD Director for small business finance.
"This is the first local currency loan for our Bank and we are sure that this new facility will further enhance our MSME lending capabilities and will enable us to expand our AMD denominated loan portfolio. With the support of the EBRD facility ACBA-Credit Agricole Bank will provide financing to local businesses in Armenia, whose cash flows are mainly in local currency, helping them to mitigate foreign exchange risks", said Stepan Gishyan, CEO of ACBA-Credit Agricole Bank.
"We are thrilled to join hands with the EBRD for our first loan to ACBA-Credit Agricole, and are proud to support an institution dedicated to the financing of rural communities in Armenia. This is a further sign of our deep commitment to financial inclusion and social impact in the underserved areas of Armenia, and more broadly of the Caucasus", said Jean-Pierre Klumpp, BlueOrchard Finance CEO.
The EBRD has a long standing relation with ACBA-Credit Agricole, having previously provided to the bank over US$ 27 million in various facilities.
This project is the EBRD's second synthetic loan in Armenia. In March 2010 the Bank offered a US$ 10 million synthetic loan to Byblos Bank for on-lending to local private businesses.
Since the beginning of its operations in Armenia in 1992, the EBRD has invested over ?420 million in 82 projects in the country's financial, corporate and energy sectors, and infrastructure, with 96 per cent of the projects' being investments into the development of the private sector.
By the latest data provided to ArmInfo by the EBRD Office in Yerevan, the bank had 15 operatign agreements in the country as of October 1 2010. The company has already invested nearly 20 million euro for SME via the banking sector and is going to increase this figure to 30 million euro till the end of the year.
ACBA-Credit Agricole Bank CJSC is the largest bank in the country in terms of assets. It was founded in May 1996 as part of TACIS project. The bank is the main financial structure in the country to specialize in agriculture and agrobusiness loans (70% of total loan portfolio). By preliminary data of the Ranking of Armenian Commercial Banks for September 30 2010 issued by the Agency of Rating Marketing Information (ArmInfo) say assets of ACBA-Credit Agricole Bank totaled 172.7 billion drams, total capital - 38.1 billion drams, total loans - 92.8 billion drams. The bank's net profit for 9 months of 2010 totaled 2.955 billion drams.
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