Project detail - Araratbank Open Joint Stock Company

Araratbank Open Joint Stock Company

Status: Investment in contracting phase
Back to map

Why disclosure?

FMO is committed to making publicly available relevant investment information that informs stakeholders and enables them to engage directly with FMO on its investments which, in turn, enhances our investment decisions, the design and implementation of projects and policies, and strengthens development outcomes. Learn more

In case of questions

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