YEREVAN, October 1, /ARKA/. The European Fund for Southeast Europe (EFSE) has provided its first loan of USD 5 million to ARARATBANK , a privately-owned Armenian Bank set up in 1991.
The loan is available to the Bank for on-lending to micro, small and medium-sized enterprises (MSMEs) especially in remote and rural areas in Armenia, thereby addressing a major constraint to economic growth. Despite the positive economic development in recent years, Armenia’s economic potential is limited by the lack of long-term credit available to MSMEs, EFSE said in a press release.
This is EFSE’s second investment in Armenia since it started operations in the country in December 2009. The loan is provided under the Fund’s European Eastern Neighbourhood Fund window which is dedicated to the European Eastern Neighbourhood Region of the European Union, including the countries of Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.
ARARATBANK is a medium-sized bank which has gained a strong expertise in MSME lending due to its continued efforts in small and medium business development, introduction and application of contemporary banking technologies, and its skilled and proficient staff. By participating in a number of lending programs implemented by international financial institutions and the Armenian government, including World Bank’s “SME Access to Finance”, Lending Programs of European Bank for Reconstruction and Development, German KfW’s “Stable development of mortgage market” program, “Economy Stabilization Lending” of the Armenian government, and credit programmes of the Swiss Izmirlian Foundation, ARARATBANK was able to provide an increase in its credit portfolio due to these additional resources. Particularly, the balance of loans extended to small businesses exceeded the previous year’s figure by 127%, while the balance of loans provided to medium businesses surpassed last year’s figure by 51%. With 31 branches, the Bank has an extensive regional network to serve the micro, small and medium-sized businesses.
“This recent investment in Armenia demonstrates EFSE’s strong commitment to the country and our region of operation”, said Dr. Klaus Glaubitt, Chairman of the EFSE Board of Directors. “Having ARARATBANK as a new, strong partner, the Fund will further expand its outreach and will enable the Bank to provide access to over 300 micro and small businesses in the Region.”
As mentioned by the Chairman of the Executive Board of ARARATBANK, Mr. Ashot Osipyan, the cooperation with EFSE is considered by ARARATBANK as supporting of new development in the sector of lending to micro, small and medium-sized enterprises. Mr. Osipyan said: “We are honoured to have a new partner with significant experience of cooperation with banking and financial institutions within Europe and former Soviet Union countries. We welcome any new project which can support the development of the banking system, provide experience and meet the interests of our customers. I am assured that the cooperation with EFSE will be prosperous and permanent.”
ARARATBANK was established as a result of reorganization of Haykapbank, operating on Armenian financial market since 1991. The Bank has been functioning as an open joint stock company since August 2007. ARARATBANK is a universal bank offering basic banking services in AMD and foreign currency to persons and corporate clients. ARARATBANK is a member of the Union of the Banks of Armenia; it is a partner of the Ministry of Finance and Economy of Armenia in domestic debt management.
ARARATBANK is a leader in the plastic card market both by the number of cards issued, as well as by the product features offered. ARARATBANK participates in the foreign trade stimulation program implemented by EBRD. The Bank corresponds with the leading banks worldwide. ARARATBANK has got a wide branch network countrywide with 31 branches currently. ARARATBANK partners with a number of reputable international financial organizations, such as the World Bank, EBRD, KfW, and this enables ARARATBANK to attract resources at more convenient terms to meet its customers’ demand.
As of 30 June 2010 total assets of the Bank amounted to AMD 45 billion 699 million. The increase over the same period of the previous year made up AMD 16 billion 751 million or 57.9%. Liabilities totaled AMD 36 billion 217 million, increase over the same period of the previous year making up AMD 14 billion 858 million or 69.6%. Total capital as of 30 June 2010 was AMD 9 billion 482 million with an increase of AMD 1893 million. As of 30 June 2010 ARARATBANK’s current year profit was AMD 605 million.
The European Fund for Southeast Europe (EFSE) is aimed at fostering economic development and prosperity in the region of Southeast Europe. It offers long-term funding instruments to local financial institutions for on-lending business loans to micro and small enterprises (MSEs) as well as housing loans to low-income private households. The investment activities of EFSE are supported by the EFSE Development Facility, which provides funding for technical assistance, consulting and training to partner lending institutions as well as awareness raising and market enabling activities.
Overall, since its inception in December 2005, EFSE has offered EUR 822 million in financing to commercial banks, microfinance institutions and non-financial institutions, facilitating a total number of more than 238,000 MSE and housing loans. Initiated by KfW (The German Development Bank), the EFSE is a Public-Private Partnership that combines funds from public and private investors, including: European Commission, Federal German Ministry for Economic Development and Cooperation (BMZ), the governments of Austria, Switzerland, Denmark and Albania, KfW, IFC, FMO Netherlands Development Finance Company, European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Oesterreichische Entwicklungsbank (OeEB), Deutsche Bank and Sal. Oppenheim. EFSE is privately managed with Oppenheim Asset Management Services S.à r.l., Luxembourg, as the fund manager and Finance in Motion GmbH, Frankfurt/Main, Germany, as the fund advisor.—0–
