MICROCAPITAL BRIEF: AEB Onlending $5.7m from EBRD, EU to SMEs in Armenia, Mostly for “Green” Investments

The European Bank for Reconstruction and Development (EBRD), a UK-based development finance institution, recently agreed to lend EUR 5 million (USD 5.7 million) to Armeconombank (AEB), an Armenian bank. The purpose is to finance small and medium-sized enterprises (SMEs) in acquiring technology that will upgrade employees’ working conditions, boost competitiveness and increase exports – including by reaching EU standards. AEB has agreed to direct at least 70 percent of the loan proceeds to fund the mitigation of and adaptation to climate change. The EU is supporting the loan with grant incentives and technical support as part of the EU4Business-EBRD credit line, a joint initiative active in Armenia, Georgia, Moldova and Ukraine.

Established in 1988 in Armenia, AEB focuses on serving individuals, microenterprises and SMEs via 54 branches. As of June 2021, the bank reports total assets of AMD 339 billion (USD 706 million), outstanding loans of AMD 208 billion (USD 433 million) and customer deposits totaling AMD 56 billion (USD 117 million).

Founded in 1991, EBRD seeks to support a “transition to open, market economies, whilst fostering sustainable and inclusive growth” in 38 countries in Central Asia, Eastern Europe and North Africa. It does this by providing business advice, supporting trade finance, and investing debt and equity in funders of microenterprises and SMEs. With a focus on “the promotion of private and entrepreneurial initiative,” the bank disbursed approximately EUR 11 billion (USD 13.3 billion) to 411 projects during 2020. EBRD’s shareholders comprise 69 countries plus the EU.

By Sheen Gupta, Research Associate

Sources and Additional Resources

EBRD press release
https://www.ebrd.com/news/2021/ebrd-and-eu-to-fund-smes-in-armenia.html

AEB homepage
https://www.aeb.am

AEB 2020 annual report and annual financial statement
https://www.aeb.am/en/hashvetvutyunner/

AEB news listing
https://aeb.am/en/1179/

Previous MicroCapital article on EBRD
https://www.microcapital.org/microcapital-brief-ebrd-loans-50m-to-qnb-alahli-of-egypt-to-boost-green-lending-to-individuals-smes/

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