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Yerevan, Armenia, February 27, 2007
– Today, IFC, the private sector arm of the World Bank Group, announced financing of Armeconombank, a fast-growing private bank in Armenia. With IFC’s $2 million loan, Armeconombank will further expand its SME and mortgage lending.
Lack of access to term funding is among the top five constraints to the growth of Armenia’s private sector, according to a 2005 survey by the World Bank. The tenor of IFC’s financing, which includes a $1 million five-year loan for on-lending to SMEs and a $1 million eight-year loan for housing finance, will allow Armeconombank to meet the high demand for longer-term funding than is currently available in the market as well as expand its lending portfolio. In addition, IFC will advise the bank on best practice standards for mortgage lending.
IFC began working with Armeconombank in 2004, with a $2 million loan to the bank that was IFC’s first investment in Armenia’s banking sector. Through its partnership with IFC, Armeconombank has become a leader in funding SMEs, which constitute the majority of the country’s private sector, and was among the first to introduce mortgage financing to individuals for the acquisition and upgrade of residential real estate. To date, the bank has made more that 30 loans to Armenian SMEs, with an average loan size of $47,000. It has also made 74 home acquisition and improvement loans to individuals, with an average size of $7,000, drawing on proceeds of the loan IFC extended in 2004.
Jerome Sooklal, Director of IFC’s Central and Eastern Europe Department, said, “IFC’s key objective in Armenia is to support further development of the private sector. A well-developed financial sector is a central component in enterprise growth. IFC is proud to continue its support of Armeconombank, helping expand access to finance and making a range of financial products available to the country’s real sector.”
David Sukiasyan, CEO of Armecomonbank, commented, “The new long-term finding from IFC will help us strengthen our bank’s position in the market and better serve our clients. We are looking forward to further deepening of our partnership with IFC.”
About IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit
www.ifc.org
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Armenia became a shareholder and member of IFC in 1995. IFC began investing in the country in 2000. As of February 2007, IFC has invested $20.6 million to support financial institutions, small retailers, and the hotel industry. In addition, IFC has provided advisory services on corporate governance, improvement of the investment climate, and small and medium enterprise development. For more information, please visit
www.ifc.org/armenia
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