Araratbank Open Joint Stock Company
Status: Proposed investmentWhy disclosure?
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In case of questions
We welcome feedback on this proposed investment opportunity for FMO. The ending of the proposed investment phase is indicated on the right side of this page. In case of questions, please contact us at disclosure@fmo.nl
Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our prospective customer?
ARARATBANK OJSC is a mid-sized universal bank in Armenia focusing on Micro, SME and Retail customers. The bank is the 9th largest bank in the country by loan portfolios and employs around 1,066 staff across 50 branches. Araratbank is an existing client of FMO since 2014 in the area of funding and technical assistance.
What is our funding objective?
The USD 25mln loan agreement consists of a USD 10mln committed and USD 15mln uncommitted tranche. This 5-year loan is used to finance a combination of women, youth, agriculture Micro and SME customers (60%), which contribute to FMO's Reducing Inequalities target, to finance Green projects (40%), supporting FMO's Climate Action target.
Why do we want to fund this investment?
FMO's loan is used by Araratbank to finance their Micro, Small and Medium Enterprises (MSME) portfolio and eligible Green projects. MSME are the core of the Armenian economy. The private sector in Armenia is dominated by MSME’s, making up about 99% of total registered enterprises. However, they contribute only for ~26% of GDP and ~68% of employment (source: ADB Asia SME Monitor 2022). Access to credit remains critical for further development of the MSME segment. More specifically, the loan proceeds will be used to finance a combination of Micro clients and eligible women/youth/agriculture clients of the bank. In turn, this supports job creation and maintenance in a Low to Middle Income Country (LMIC) where ~42% of the population live below the poverty line (World Bank) and unemployment rate is ~13%.
What is the Environmental and Social categorization rationale?
The client has been categorized as FI-B in accordance with FMO’s Sustainability Policy. Araratbank has an SME focus and limited high risk sector exposure in their portfolio. Therefore it was deemed that the customer's business activities have potential limited adverse environmental or social risks. As part of the transaction Araratbank will be required to apply FMO's Exclusion List, Armenia's E&S Laws and Regulations, and IFC Performance Standards to applicable transactions.
More investments
| Date | Total FMO financing |
|---|---|
| 5/17/2021 | USD 25.00 MLN |
| 10/22/2019 | USD 10.00 MLN |
| 4/24/2023 | USD 20.00 MLN |
| 8/29/2019 | USD 7.50 MLN |
| 8/29/2019 | USD 10.00 MLN |
- Website customer/investment
- http://www.araratbank.am
- Region
- Europe & Central Asia
- Country
- Armenia
- Sector
- Financial Institutions
- Publication date
- 10/30/2024
- Deadline for feedback
- 11/29/2024
- Total FMO financing
- USD 10.00 MLN
- Funding
- FMO NV
-
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - B