IFC Makes First Investment in Armenian Bank
Armenia, Yerevan, July 30, 2004
—Today, the International Finance Corporation (IFC), the private sector arm of the World Bank group, provided a $2.0 million senior loan to Armeconombank to broaden the Bank’s funding base for on-lending to SMEs and for financing residential housing projects.
By providing financing to Armeconombank (AEB), IFC will enable the Bank to expand its lending operations and provide commercial financing to businesses in a variety of sectors, therefore fostering economic growth. In addition, as the first IFC investment in Armenian commercial banking sector, the project will have an important demonstration effect for other potential investors.
At the signing ceremony Mr. Edward Nassim, Director of the IFC’s Central and Eastern Europe Department, commented: "We are very pleased to start our investments in the Armenian banking sector with such a reliable partner as Armeconombank. Our loan, apart from the commercial financing, will allow the bank to substantially expand its mortgages financing program, which will play an important role in raising living standards of Armenian citizens.”
Mr. Saribek Sukiasyan, Chairman of the Board of Armeconombank, commented, “I am proud today to see the International Finance Corporation as a lending partner to Armeconombank. Diversification of funding sources for our bank was a priority in our strategy. I hope that we will continue to deepen our cooperation with IFC in future.”
Mr. Ashot Osipyan, Chief Executive Officer of Armeconombank said, “By signing this loan agreement we will be able to offer to our corporate clients financial resources with longer maturities and substantially increase our outstanding portfolio in mortgages to individual clients. Dedicated and effective work of the teams engaged in negotiations, enabled us to reach to this agreement in a short period of time.”
Armeconombank (AEB) is one of the largest, privately controlled banks in Armenia. It is the 4th largest bank in Armenia in terms of assets, with 24 branches across the country and 450 employees. Today the Bank focuses on serving SMEs, retail clients, and financial institutions. AEB had the net worth of approximately $5.3 million and total assets of approximately $33.4 million equivalent as of the end of 2003.
The mission of IFC, part of the World Bank Group, is to promote sustainable private sector investment in developing countries as a way to reduce poverty and improve people’s lives. IFC finances private sector investments in emerging markets, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.
Armenia became an IFC member in 1995. The Corporation began investing in the country in 2000. As of July 2004, IFC has invested $9,09 million in 3 projects including the loan to Armeconombank. IFC continues to explore the investment opportunities in partnership with strategic investors in both the financial and real sectors of the country. In addition to the investment program, IFC has been providing advisory services on corporate governance, improvement of the investment climate and small and medium enterprise development.
