ArmInfo. The European Bank for Reconstruction and Development (EBRD) and ARMSWISSBANK have signed two new loan agreements totalling USD 8 million under the SME Competitiveness Programme in Eastern Partnership that is supported by the European Union (EU) ("SME Competitiveness Programme") and Green Economy Financing Facility in Armenia Phase ll Energy Efficiency Program ("GEFF in Armenia") supported by the Green Climate Fund (GCF).
Head of EBRD Armenia Office Dimitri Gvindadze noted that the financial sector has always been a priority for the Bank: "For several years of EBRD's activity in Armenia, it has become an obvious fact that the financial sector is ahead of other sectors in terms of the number of transactions." In this regard, he reminded that in Armenia EBRD cooperates with 8 banks, which account for 2/3 of the assets of the financial sector.
Speaking about the green economy financing program, he noted that this direction is fundamental, which, on the basis of many international financial institutions, has migrated to the main priorities. In turn, Executive Director of ARMSWISSBANK Gevorg Machanyan said that cooperation with EBRD started with small volumes back in 2009. However, from year to year, the volume of joint programs being implemented grew. "Our main priority was initially trade financing. Three times ARMSWISSBANK was nominated for the most active partner bank in the field of trade finance by EBRD," he added.
In this regard, Machanyan said that in 2021 the EBRD increased the trade financing limit for the Bank by another $ 6.5 million, bringing it to $ 28.5 million, which is currently one of the largest limits in the banking system of Armenia. Today, cooperation between financial institutions is developing in different directions. Expressing satisfaction in connection with the successful cooperation over many years, Machanyan assured that ARMSWISSBANK is always ready to further expand the framework of cooperation with EBRD.
Answering the question of an ArmInfo correspondent, G. Machanyan noted that EBRD provided credit funds for a period of 4 years, however, ARMSWISSBANK intends to provide loans to the private sector with a maturity of up to 5 years on concessional terms. Both programs, he said, have a cashback component: in the case of the first program in the amount of 15%, and the second - 20%. There are no restrictions on the size of the loan issued. "Interest rates on dollar loans will make 9%, but taking into account the cashback component, the lending terms we offer are better than market ones," the head of ARMSWISSBANK explained.
According to the message of ARMSWISSBANK, within the scope of the SME Competitiveness Programme, the Bank will offer its customers business loans on competitive terms with a maturity of up to 5 years. SME Competitiveness Programme aims to raise the standards of local companies, modernise production, improve working conditions, and promote competitiveness in local and international markets. At least 70% of any loan must be directed to investments in green technologies. The loans will also have an incentives component (grants) and technical assistance supported by grant resources from the European Union.
Within the scope of the second phase of GEFF in Armenia, the Bank will offer loans to the corporate clients for up to 5 years maturity and with preferential terms. Funding will be available for investments in green technologies, particularly in climate adaptation and mitigation technologies, i.e. thermal insulation, solar PV power plants, geothermal heat pumps, water-efficient irrigation systems will be funded. Up to 1,600 pre-approved high-performance technologies can be accessed by the Bank's clients through Green Technology Selector (GTS). The Facility also includes a comprehensive package of technical assistance to local businesses to help identify and seize opportunities for green investments. The GCF will support the Facility by providing incentive grants to eligible green projects. Financing energy efficiency projects have always been one of the Bank's strategic directions. Before participating in these programs, the Bank, in cooperation with EBRD and other international financial partners, funded more than 100 "green" technology projects. During the first phase of the GEFF in Armenia, ARMSWISSBANK has contributed to producing 5.5 GWh/year clean energy and GHG reduction by 2,747 tonnes/year disbursing 2.5 million EUR, equalling funds.
In addition, the Bank and EBRD also effectively cooperate in the field of Trade Finance in the framework of the Trade Facilitation Programme (TFP) and based on the results of the previous year's activity, the Bank, during EBRD's 2021 annual meeting, was awarded the "Most Active Issuing Bank in Armenia" for the third year in a row. Considering the activity and efficiency of the cooperation, EBRD increased the Trade Finance limit of the Bank by USD 6.5 million, totalling it to USD 28.5 million, which currently is one of the most significant limits in the Armenian banking system.
The Bank has been cooperating with the EBRD since 2010. The cooperation is actively developed in the areas of SME Lending, Trade Finance, Green Finance and Global General Repo Agreement (GMRA), which regulates the process of concluding repo transactions with securities in the international financial markets, adopted by the International Association (ICMA - International Capital Markets Association). In July 2014, the EBRD granted the Bank the status of "Approving Bank".
According to the Financial Rating of Banks of Armenia as of June 30, 2021, prepared by ArmInfo IC, the loan portfolio of Armswissbank amounted to $ 228 million, of which over 80% or $ 184.4 million was directed to lending to the country's economy. The volume of lending by Armswissbank to SMEs as of this date reached almost $ 100 million (or 44% of the bank's loan portfolio), with n y-o-y growth of 17%. Armswissbank is in the TOP-5 in terms of lending to the industrial sector - $ 82.2 million (or 36% of the bank's loan portfolio). Armswissbank completed the first half of 2021 with a net profit of $ 10.2 million, gaining a foothold in the TOP-3.
