Armenian Economy Development Bank OJSC
Status: Investment in contracting phaseWhy disclosure?
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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?
Armeconombank OJSC (“AEB”) is a top-10 Armenian mid-sized universal bank with a focus on MSME/Retail. AEB reports Total assets of ~USD 1.1b, Equity of USD 124m and RoE amounting to 14.9% as of Q3 2023. With ~964 staff members the bank operates a top-5 branch network in the country with 54 branches. FMO has partnered with AEB previously during the 2010-2013 period, and then again reinforced this partnership by providing a senior loan of USD 20mln in 2019 and a combined USD 10mln and EUR 5mln loan in 2020. The key shareholders are members of the Sukiasyan family, who own the bank for 57.5%, and the remainder is widely spread.
What is our funding objective?
The new 5-year senior unsecured loan of up to USD 30 million will be fully used to finance eligible sub-loans under FMO’s Reducing Inequalities label. The purpose of the loan is to finance Micro clients and Youth/Women SME customers of AEB. This will contribute to SDG 10 (Reducing Inequalities).
Why do we want to fund this investment?
Armenia’s private sector is mainly composed of MSMEs, which account for around 98% of total registered businesses and as such they are fundamental to the overall socio-economic development of the country. However, despite their significant presence, they contribute to about 25% of the country's GDP and around 19% of employment, as the sector has limited access to credit. With this transaction to Armeconombank, FMO will contribute to improving access to finance for Armenian MSMEs that remain underserved, thereby supporting its goal of Reducing Inequality. AEB will use the FMO loan to finance the eligible projects meeting our Reducing Inequality Criteria (100%), where part of the investment will be more specifically targeted towards female-owned SMEs, micro enterprises, and agri entrepreneurs.
What is the Environmental and Social categorization rationale?
The project has been categorized as Category B in accordance with FMO’s Sustainability Policy. AEB has an E&S Management System (ESMS) in place which is based on IFC and EBRD's guidance and criteria. The bank’s Corporate and Project Finance loans are less than 10% of the bank’s total loan portfolio and well below the USD 300mln threshold. The exposure to high E&S risk sectors is well below the threshold of 20%. Given the presence of such transactions in the portfolio, AEB’s E&S risk categorization is set at “B”. As part of the project, the bank will be required to apply the EDFI Exclusion List and local E&S laws and regulations.
More investments
| Date | Total FMO financing |
|---|---|
| 5/5/2020 | USD 10.00 MLN |
| 5/5/2020 | EUR 5.00 MLN |
| 6/8/2021 | USD 5.00 MLN |
| 5/15/2019 | USD 10.00 MLN |
- Website customer/investment
- https://www.aeb.am/en/
- Region
- Europe & Central Asia
- Country
- Armenia
- Sector
- Financial Institutions
- Publication date
- 2/5/2024
- Deadline for feedback
- 3/6/2024
- Total FMO financing
- USD 30.00 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