Wednesday, June 8 2011 10:34
EFSE and ARARATBANK sign loan agreement to support micro and small enterprises in Armenia
ArmInfo. The European Fund for Southeast Europe (EFSE) - initiated by the KfW Entwicklungsbank (The German Development Bank) with the financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Commission - signed a new 10 million US dollar loan agreement with ARARATBANK (or the "Bank") in Armenia at the EFSE's Annual Meeting held in Tirana, Albania, today. The loan will help the Bank expand its micro and small enterprise (MSE) lending activities, EFSE press-service told ArmInfo.
ARARATBANK is among the top-ten banks in Armenia in terms of assets with a market share of 4.2 per cent (as of 31 March 2011). The Bank provides a full range of banking services to micro, small and medium-sized enterprises, corporations and retail customers. The EFSE's loan will enable the Bank to provide its clients with sustainable long term financing, which is still scarce for local MSEs, thereby addressing a major obstacle to the country's economic growth. Thanks to the Bank's extensive branch network, the credit facility will particularly benefit MSEs outside Armenia's capital, Yerevan, in areas where the supply of banking services is still limited.
The EFSE and ARARATBANK have been partners since June 2010, when the Bank received a USD 5 million credit line for on-lending to MSEs. The EFSE's first loan has already had a strong development impact by helping to create and sustain jobs as well as accelerating business growth among MSEs and increasing confidence in the banking sector in Armenia.
"The EFSE's first loan to ARARATBANK has been implemented successfully, and we are pleased to support the Bank again", said Dr. Klaus Glaubitt, Chairman of the Board of Directors of the EFSE. "Through financially sustainable institutions such as ARARATBANK, the EFSE is supporting growth and development of Armenia's MSEs, which are a key element for economic development in terms of their contribution to employment and economic growth."
Mr Ashot Osipyan, Chairman of the Executive Board of ARARATBANK, appreciating the cooperation between European Fund for Southeast Europe (EFSE) and ARARATBANK OJSC, stated that the 10 million US dollar credit line is already the second project implemented in cooperation with EFSE. He added: "I am extremely gratified that the cooperation between ARARATBANK OJSC and our respected partner, the European Fund for Southeast Europe, which has significant experience in the region and in former Soviet Union countries, has proved such a success within such a short timeframe. Since October 2010, when the USD 5 million loan agreement was signed, we have on-lent funds to micro and small businesses for approximately 110 credit projects. The EFSE's loan enabled us to provide our clients with increased credit availability and more competitive conditions, and to diversify our loan portfolio".
Mr Ashot Osipyan emphasized that this new credit line of 10 million US dollars is expected to have a significant impact on the development of micro and small businesses in Armenia, affording an opportunity to prosper and implement new business projects for many existing and new loan customers. As one of Armenia's leading banks in the area of micro and small business finance, ARARATBANK OJSC intends to, within the framework of its development mission, enlarge its loan volume and geographic reach. The Bank will also continue to strengthen its productive cooperation with the European Fund for Southeast Europe in the future.
ARARATBANK is among the most experienced banks in the area of SME and MSE lending in Armenia. ARARATBANK's loan portfolio has experienced dynamic and sustainable growth since 2007 thanks to modern lending technologies and methods, its professional and highly qualified staff, and its wide-ranging branch network. In 2010, loan volume grew by 57%, and an increase of 15% has been reported for the first quarter of 2011.
EFSE was established in 2005 with KfW Entwicklungsbank as the Initiator under the laws of the Grand Duchy of Luxembourg as a "SICAV" together with a regional funding facility for Albania, Bulgaria, FYR Macedonia, Moldova and Romania. At the Fund's inception, the primary funding base was comprised of donor contributions from the European Union, the German, Swiss and Austrian governments as the main sponsors of the preceeding European Funds. The Fund wishes to generate impact at three different levels: Supporting micro and small enterprises as the backbone of the local economies, therewith contributing to income generation and employment creation; satisfying the basic need of decent shelter; and strengthening local financial markets. EFSE launched activity in Armenia in December 2009 and has already made 2 investments. The first loan from EFSE in the amount of $10 mln was provided to Converse Bank in June 2010, the second and the third loans in the amount of $15 mln in total were provided to ARARATBANK. Ranking of Armenian Commercial Banks prepared by the Agency of Rating Marketing Information (ArmInfo), the credit exposures of ARARATBANK as of April 1 2011 totaled 30 bln drams (up 63% versus April 2010). 67% of the loan portfolio of the bank were financing of the economy sectors.
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