MICROCAPITAL BRIEF: European Fund for Southeast Europe (EFSE) Loans $3.4m to Agricultural Cooperative Bank of Armenia (ACBA) Leasing in Armenia, Makes $106k Equity Investment in Kreditimi Rural i Kosoves of Kosovo

The European Fund for Southeast Europe (EFSE), a Luxembourg-based microfinance investment vehicle (MIV) backed by multiple governments, has disbursed two loans totaling USD 3.4 million in Armenia to Agricultural Cooperative Bank of Armenia (ACBA) Leasing, the leasing subsidiary of ACBA [1]. EFSE also made an equity investment of EUR 77,600 (USD 106,100) in Kreditimi Rural i Kosoves LLC (KRK), a non-bank microfinance institution (MFI) that serves rural areas in Kosovo. The size of the stake EFSE just took in KRK and the total it now holds has not been disclosed. As reported by MicroCapital in February, EFSE had made an equity investment in KRK earlier in the year as well.

ACBA Leasing, which finances the acquisition of machinery and equipment, does not report to the US-based nonprofit (MIX), and financial data on the subsidiary is not otherwise available. ACBA, a microfinance bank partially owned by French bank Credit Agricole, reported total assets of AMD 253 billion (USD 625 million) as of March 2013.

As of September 2013, KRK reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 16 million, a gross loan portfolio of USD 13.4 million, 6,650 active borrowers, return on assets (ROA) of 3.71 percent and return on equity (ROE) of 11.2 percent. It does not accept deposits.

EFSE has an outstanding investment portfolio of EUR 774 million (USD 1 billion) as of June 2013. As of 2013, EFSE holds a microfinance label from Luxembourg Fund Labeling Agency (LuxFLAG), an NGO that certifies that social investment vehicles actually invest as advertised.

By Nisha Koul, Research Associate

About Agricultural Cooperative Bank of Armenia (ACBA) Leasing: Established in 2003, ACBA Leasing is the leasing subsidiary of Agricultural Cooperative Bank of Armenia (ACBA), a regulated bank in Armenia partially owned by French bank Credit Agricole. ACBA Leasing finances the acquisition of machinery and fixed assets such as equipment for engineering, agriculture, medical procedures, transportation and service businesses. Leasing contracts can last up to 60 months with annual interest rates ranging from 12 percent to 18 percent. ACBA Leasing does not report financial information to the US-based Microfinance Information Exchange (MIX).

About Agricultural Cooperative Bank of Armenia-Credit Agricole Bank (ACBA): Agricultural Cooperative Bank of Armenia (ACBA) was founded by the Agricultural Cooperative Regional Unions of the three Armenian provinces of Shirak, Armavir and Ararat and obtained a full banking license on March 29, 1996. ACBA was initially created to finance small and medium-sized agricultural enterprises and individual farmers. In the next few years the bank began to finance non-agricultural activities. In 2006, Credit Agricole SA France made an investment in ACBA and the bank was reorganized into ACBA-Credit Agricole Bank closed joint stock company. As of March 2013, it reported total assets of AMD 253 billion (USD 625 million).

About Kreditimi Rural I Kosoves LLC (KRK): Kreditimi Rural I Kosoves (KRK) is a microfinance institution based in Kosovo. Formerly called the Rural Finance Project of Kosovo, KRK aims to assist farmers and rural microentrepreneurs in restoring and developing agricultural production capacity and establishing a sustainable, community-based rural credit scheme. As of September 2013, KRK reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 16 million, a gross loan portfolio of USD 13.4 million, 6,650 active borrowers, return on assets (ROA) of 3.71 percent and return on equity (ROE) of 11.2 percent. It does not accept deposits.

About European Fund for Southeast Europe (EFSE): The European Fund for Southeast Europe (EFSE) 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 2013, EFSE holds a 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] Information submitted by Finance in Motion to MicroCapital, December 2013.

MicroCapital Story, December 19, 2013, “European Fund for Southeast Europe (EFSE) Loans $63m to Belorussian-Russian Belgazprombank of Belarus, Banca Transilvania of Romania, Microfinance Institution AccessBank of Azerbaijan,” https://www.microcapital.org/microcapital-brief-european-fund-for-southeast-europe-efse-loans-63m-to-belorussian-russian-belgazprombank-of-belarus-banca-transilvania-of-romania-microfinance-institution-accessbank-of-azerbai/

MicroCapital Story, November 14, 2013, “European Bank for Reconstruction and Development (EBRD) Issues $12.5m in Local Currency Loans to Armenia’s Agricultural Cooperative Bank of Armenia-Credit Agricole Bank (ACBA) to Support Micro-, Small and Medium-Sized Enterprises (MSMEs), Energy Efficient Investments,” https://www.microcapital.org/microcapital-brief-european-bank-for-reconstruction-and-development-ebrd-issues-12-5m-in-local-currency-loans-to-armenias-agricultural-cooperative-bank-of-armenia-credit-agricole-bank-ac/

MicroCapital Story, February 14, 2013, “European Fund for Southeast Europe (EFSE) Makes $643k Equity Buy into Kreditimi Rural I Kosoves of Kosovo,” https://www.microcapital.org/microcapital-brief-european-fund-for-southeast-europe-efse-makes-643kequity-buy-into-kreditimi-rural-i-kosoves-of-kosovo/

MicroCapital Story, July 14, 2011, “responsAbility Loans $24m to Microfinance Institutions (MFIs) Inecobank, Agricultural Cooperative Bank of Armenia (ACBA), ACBA Leasing all of Armenia; DemirBank of Azerbaijan; Sekerbank of Turkey,” https://www.microcapital.org/microcapital-brief-responsability-loans-24m-to-microfinance-institutions-mfis-inecobank-agricultural-cooperative-bank-of-armenia-acba-acba-leasing-all-of-armenia-demirbank-of-azerbaijan-seke/

MicroCapital Universe Profile, Agricultural Cooperative Bank of Armenia (ACBA) Leasing, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ACBA+Leasing

MicroCapital Universe Profile, Kreditimi Rural I Kosoves LLC (KRK), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Kreditimi+Rural+I+Kosoves

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

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