The European Fund for Southeast Europe (EFSE), a microfinance investment fund incorporated in Luxembourg, agreed to loan USD 10 million to Araratbank at EFSE’s recent annual meeting in Armenia. Araratbank is an Armenian bank that serves micro- and small enterprises (MSEs); corporations; and retail customers. With EFSE’s loan, Araratbank plans to provide sustainable, long-term financing to MSEs, with a particular emphasis on those outside Yerevan, Armenia’s capital, where banking service supplies are still limited will particularly benefit from the bank’s wide branch network.
The USD 10 million credit line is the second transaction between EFSE and Araratbank, following EFSE’s USD 5 million credit line for on-lending to MSEs that was issued in June 2010. Mr Ashot Osipyan, Chairman of the executive board of Araratbank, said, “Since October 2010, when the USD 5 million loan agreement was signed, we have on-lent funds to micro and small businesses for approximately 110 credit projects. The EFSE’s loan enabled us to provide our clients with increased credit availability and more competitive conditions, and to diversify our loan portfolio.” According to EFSE, Araratbank’s loan volume grew by 57 percent in 2010 to AMD 25.2 billion (USD 67.6 million). As of December 31, 2009, Araratbank reported total assets of AMD 43.5 billion (USD 112 million).
By Carol Kim, Research Associate
About Araratbank: Araratbank, which previously operated as Haykap Bank, was founded in 1991 in Armenia and provides banking services to micro-, small and medium-sized enterprises (MSMEs) as well as to corporate and retail customers. The European Bank for Reconstruction and Development (EBRD) has a 25 percent plus one share stake in the bank. According to Araratbank’s annual report, the bank had total assets of AMD 43.5 billion (USD 112 million) and a gross loan portfolio of AMD 16.1 billion (USD 41.4 million) as of December 31, 2009.
About European Fund for Southeast Europe (EFSE): Established in 2005, EFSE mobilizes capital for microfinance institutions (MFIs) and aims to foster economic development in southeastern Europe and parts of Central Asia by supporting the provision of financial services to low-income households and micro- and small enterprises via local financial institutions. EFSE is privately managed, with Oppenheim Asset Management Services acting as its fund manager and Finance in Motion GmbH acting as fund advisor. As of December 31, 2009, EFSE has an outstanding investment portfolio of EUR 578 million (USD 775 million). LuxFLAG, an organization that certifies that microfinance investment vehicles actually invest in the microfinance sector, renewed EFSE’s label as of 2011.
Sources and Additional Resources:
European Fund for Southeast Europe (EFSE) Press Release: “EFSE and Araratbank sign loan agreement to support micro and small enterprises in Armenia Press Release”, June 2011, http://www.efse.lu/Press-releases—Details—2011-06-07-EFSE-and-Araratbank-sign-loan-agreement-to-support-micro-and-small-enterprises-in-Armenia——_nav.52_siteid.134_entryid.362_dir._likecms.html
Armbanks.am: “Araratbank earns 1.27 billion drams in net profits last year”, June 2011, http://www.armbanks.am/en/2011/06/22/24594/
MicroCapital.org: “MICROCAPITAL BRIEF: Microfinance Investment Vehicle (MIV) European Fund for Southeast Europe (EFSE) Loans Hipotekarna Banka of Montenegro and Ararat Bank of Armenia $11m”, October 13, 2010, https://www.microcapital.org/microcapital-brief-microfinance-investment-vehicle-miv-european-fund-for-southeast-europe-efse-loans-hipotekarna-banka-of-montenegro-and-ararat-bank-of-armenia-11m/
MicroCapital.org: “MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) Participates in $2.6m Capital Increase in Armenian Bank Araratbank Serving Micro-, Small and Medium-sized Enterprises”, May 18, 2010, https://www.microcapital.org/microcapital-brief-european-bank-for-reconstruction-and-development-ebrd-participates-in-26m-capital-increase-in-armenian-bank-araratbank-serving-micro-small-and-medium-sized-enterprises/
MicroCapital’s Universe Profile: European Fund for Southeast Europe (EFSE), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Fund+for+Southeast+Europe+%28EFSE%29
MicroCapital’s Universe Profile: Araratbank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Araratbank
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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