Monday, May 21 2012 19:03
EFSE and Inecobank sign loan agreement of USD 10 million 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 - has opened a USD 10 million credit facility for Inecobank (the Bank) in Armenia. The Bank will utilise the funding to enhance access to longer-tenor loans for micro and small enterprises (MSEs).
In addition to strengthening the Bank's capacity to provide sustainable long-term financing to MSEs, resulting in over 1,500 new loans, the credit facility also supports the Bank in its plans to further expand lending operations in the micro, small and medium enterprise (MSME) segment. Inecobank provides a universal range of banking services and aims to become one of the top banks serving the MSME segment in Armenia.
"We are proud to welcome Inecobank as our new partner lending institution in Armenia. This opens new opportunities to further strengthen our support of Armenian micro and small enterprises through yet another a well-established financial institution that operates in line with the EFSE's Responsible Finance practices. At the EFSE, we are pleased to support Inecobank's strategy to expand its MSME loan portfolio to meet the growing demand for longer-term financing from smaller businesses, thereby contributing to the overall growth of the Armenian economy", said Monika Beck, Chairperson of the Board of Directors of the EFSE.
"We are happy to establish a new partnership with such an honourable organisation as The European Fund for Southeast Europe. The newly established relations manifest an opportunity for Inecobank to continue providing more loans for micro, small and medium enterprises. It is crucial for the Bank to expand its loan portfolio in order to meet the demands of the smaller businesses, and to do everything in its power to assist micro and small enterprises and enhance their sustainability. We believe that this cooperation is only the first step of an enduring and productive partnership", said Avetis Baloyan, Chief Executive Officer of Inecobank Armenia.
To note, this has been EFSE's fourth investment of in Armenia since 2009. The first loan (10 mln USD) from the EFSE was provided to Converse Bank (in June 2010), the second loan (5 mln USD) was provided to ARARATBANK (in October 2010), the third loan (875 mln AMD and 3 mln USD) was provided to Byblos Bank Armenia (in December 2011).
To recall, the European Fund for Southeast Europe aims to foster economic development and prosperity in the Southeast Europe region, including the European Eastern Neighbourhood Region, through the sustainable provision of additional development finance. The Fund offers long-term funding instruments to qualified partner lending institutions to better serve the financing needs of micro and small enterprises and low-income private households. 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.
According to the Ranking of Banks of Armenia by the Agency of Rating Marketing Information (ArmInfo), by 1 April 2012 the provision of crediting of INECOBANK grew by 53% versus the same period of 2011 and totaled 66.6 bln AMD ($171 mln). In its structure loans to economy make up 67% (70% y-o-y growth). Over 33% of the loans were utilized in the sphere of trade and over 8% - in the sphere of public catering and services. By its SME portfolio, the bank holds the 3rd position in the banking system of Armenia - 36 bln AMD (54% of the total provision of crediting), with the y-o-y growth being more than 60%.
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