MICROCAPITAL BRIEF: European Fund for Southeast Europe (EFSE) Loans $12m to Araratbank of Armenia to Support Micro-, Small Enterprises (MSEs)

The European Fund for Southeast Europe (EFSE), a Luxembourg-based microfinance investment vehicle, has announced that it is loaning USD 12 million to Araratbank Open Joint Stock Corporation (OJSC), an Armenian bank that provides financial services to micro- and small enterprises (MSEs) [1]. The loan will support sub-loans to be disbursed by Araratbank to MSEs with annual interest rates of 10 to 11 percent with five-year terms. Simultaneously, Araratbank has begun offering interest rates as low as 9 percent per year for borrowers active in selected sectors such as jewelry production [2].

As of March 2014, Araratbank has total assets of USD 320 million, a loan portfolio of USD 150 million and 47 branches across the country. Updated information on deposits accepted by the bank is not available. As of June 2013, EFSE has an investment portfolio of EUR 774 million (USD 1 billion).

By Nisha Koul, Research Associate

About Araratbank: Araratbank, previously called Haykap Bank, was founded in 1991 in Armenia and provides services primarily to micro-, small sized enterprises (MSEs). As of 2014, Araratbank is offering interest rates as low as 9 percent per year for borrowers active in selected sectors such as jewelry production. As of March 2014, Araratbank has total assets of USD 320 million, a loan portfolio of USD 150 million and 47 branches across the country. Updated information on deposits accepted by the bank is not available.

About European Fund for Southeast Europe (EFSE): The European Fund for Southeast Europe (EFSE) is a Luxembourg-based microfinance investment vehicle that was established in 2005 by Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW), a German development bank, with financial support from the German Federal Ministry for Economic Cooperation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung) and the European Commission of the EU. EFSE seeks to aid 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 of Luxembourg acting as fund manager and Finance in Motion GmbH of Germany acting as fund advisor. As of June 2013, EFSE has an investment portfolio of EUR 774 million (USD 1 billion). As of December 2013, EFSE holds an annual microfinance label from Luxembourg Fund Labeling Agency (LuxFLAG), an NGO that certifies that social investment vehicles actually invest as advertised.

Sources and Additional Resources:

[1] Press Release submitted to MicroCapital by EFSE, June 2014.

[2] Information provided to MicroCapital by Araratbank, June 2014.

MicroCapital Story, March 8, 2013, “European Fund for Southeast Europe (EFSE) Loans $974k to Araratbank of Armenia,” https://www.microcapital.org/microcapital-brief-european-fund-for-southeast-europe-efse-loans-974k-to-araratbank-of-armenia/

MicroCapital Story, January 15, 2013, “responsAbility Social Investments Loans $1.5m to Al Majmoua (Lebanese Association for Development), $10m to Araratbank of Armenia,” https://www.microcapital.org/microcapital-brief-responsability-social-investments-loans-1-5m-to-al-majmoua-lebanese-association-for-development-10m-to-araratbank-of-armenia/

MicroCapital Universe Profile: European Fund for Southeast Europe (EFSE), http://microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Fund+for+Southeast+Europe+%28EFSE%29

MicroCapital Universe Profile: Araratbank, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ARARATBANK

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