The European Bank for Reconstruction and Development (EBRD) has added AMD 255 million (USD 650,000) to its investment in ARARATBANK, an Armenian bank that provides banking services primarily to micro-, small and medium-sized enterprises (MSMEs). EBRD’s additional investment is part of ARARATBANK’s total capital increase of AMD 1 billion (USD 2.6 million), where EBRD’s percentage ownership will remain at 25 percent plus one share. According to ARARATBANK’s 2008 annual report, there are a total of 84 shareholders in ARARATBANK, of which 80 are individual shareholders and 4 are legal entities.
Through the capital increase, ARARATBANK intends to diversify its loan portfolio to include medium and large businesses, as well as broadening its branch network. Also, with an increased capital base, ARARATBANK expects to be able to attract local-currency financing from the Central Bank of Armenia, which would enable it to increase its Armenian dram denominated lending.
In 2008, EBRD bought its 25 percent plus one share stake in ARARATBANK (the amount paid for the investment has not been disclosed). Prior to its initial equity investment in 2008, EBRD provided ARARATBANK with a USD 5 million credit line specifically for lending to MSMEs. EBRD had also provided a USD 2 million credit line to enable ARARATBANK to provide corporate loans to medium and large enterprises under the EBRD’s Medium-Sized Co-financing Facility Framework. And finally, EBRD provided a USD 2 million trade finance facility to enable ARARATBANK to offer its corporate clients trade financing services.
According to ARARATBANK’s annual report, as of December 31, 2009, ARARATBANK 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).
By: Christine Chang, Research Associate
About European Bank for Reconstruction and Development (EBRD):
The European Bank for Reconstruction and Development (EBRD) began operations in 1991 upon the agreement of 40 countries and is now owned by 61 countries as well as the European Investment Bank and the European Union. It aims to finance operations that are both commercially viable and assist development in 29 countries in Central Europe and Central Asia. It does this by providing loans, debt securities, equity investments, guarantees and technical assistance to micro- and small businesses as well as commercial banks and non-bank microfinance institutions (MFIs). As of the end of 2008, EBRD has operating assets worth EUR 5.2 billion, the equivalent of over USD 7 billion.
About ARARATBANK:
ARARATBANK, previously called Haykap Bank, was founded in 1991 in Armenia and provides a full range of banking services to micro-, small and medium-sized enterprises (MSMEs), 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, as of December 31, 2009, ARARATBANK 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).
Additional Resources:
EBRD press release: EBRD participates in capital increase of Araratbank, Armenia, May 14, 2010: http://www.ebrd.com/new/pressrel/2010/100514.htm
EBRD press release: EBRD to invest in Armenia’s Araratbank, October 30, 2008: http://www.ebrd.com/new/pressrel/2008/081030.htm
EBRD press release: EBRD funding for Armenia’s Araratbank, December 27, 2007: http://www.ebrd.com/new/pressrel/2007/071228a.htm
MicroCapital Universe: European Bank for Reconstruction and Development (EBRD): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Bank+for+Reconstruction+and+Development+%28EBRD%29
MicroCapital Universe: 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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