ARARATBANK and EBRD sign agreement for big business co-financing in Armenia

Ashot Osipyan said in a press conference timed to the agreement that the parties will provide 50%-50% or 60%-40% co-financing under the project. Loans in the amount of $400,000 and higher will be provided for 7 years. "These are unprecedented conditions: the banking system provided only 5-year-maturity loans to the big business sector before. Now this term has been increased to 7 years," he said. In response to ArmInfo's question regarding the interest rates, A. Osipyan said they will depend on the market developments, but the bank is currently going to provide loans at the annual interest of 11-14% depending on the risk level equally shared by the co-financiers. Proceeding from the priorities of the two parties, loans under the co-financing project will be provided to economic entities in all sectors of economy meeting environmental requirements, except the producers of alcohol, weapons and tobacco, Ashot Osipyan said.

As potential sectors of lending under the given project, the bank outlines the renewable energy sector, flour production, construction and food and light industries. "The project is designed for a higher amount of financing, but the envisaged $4 million must be placed so far," he said.

Earlier together with the EBRD ARARATBANK lent to the small and mid-term enterprises, trade sector in the total amount of $12 million. The credit portfolio of the bank contains the funds raised from international sources and loans provided at the expense of local resources (50%-50%). For his part, V. Razlog said that as part of the co-financing project, the European Bank will not only fund but also render technical support to estimate risks. "Implementation of the given project requires new skills and knowledge different from SME lending technologies. This is a big advantage for the current and new clients of ARARATBANK," V.Razlog said. He said EBRD is implementing co-financing projects with 5 local banks and is going to extend this list.

As of Jan 1 2010, assets of ARARATBANK amounted to 41.2 billion drams (39.5% annual growth), credit portfolio - 16.2 billion drams (33% annual growth), total capital - 7/8 billion drams. Profits for 2009 totaled 580 million drams. "Flash" oil trader company holds a 74.1% stake in the bank and the blocking stake of 25%+1 share belong to the EBRD.