EFSE and ARARATBANK sign loan agreement to support micro and small enterprises in Armenia

• USD 10 million credit line to ARARATBANK for on-lending to micro and small enterprises

Tirana (Albania) and Yerevan (Armenia), 7 June 2011 – The European Fund for Southeast Europe (EFSE) – initiated by the KfW Entwicklungsbank (The German Development Bank) with the financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Commission – signed a new 10 million US dollar loan agreement with ARARATBANK (or the “Bank”) in Armenia at the EFSE’s Annual Meeting held in Tirana, Albania, today. The loan will help the Bank to expand its micro and small enterprise (MSE) lending activities.

ARARATBANK is among the top-ten banks in Armenia in terms of assets with a market share of 4.2 per cent (as at 31 March 2011). The Bank provides a full range of banking services to micro, small and medium-sized enterprises, corporations and retail customers.

The EFSE’s loan will enable the Bank to provide its clients with sustainable long term financing, which is still scarce for local MSEs, thereby addressing a major obstacle to the country’s economic growth. Thanks to the Bank’s extensive branch network, the credit facility will particularly benefit MSEs outside Armenia’s capital, Yerevan, in areas where the supply of banking services is still limited.

The EFSE and ARARATBANK have been partners since June 2010, when the Bank received a USD 5 million credit line for on-lending to MSEs. The EFSE's first loan has already had a strong development impact by helping to create and sustain jobs as well as accelerating business growth among MSEs and increasing confidence in the banking sector in Armenia.

"The EFSE’s first loan to ARARATBANK has been implemented successfully, and we are pleased to support the Bank again", said Dr. Klaus Glaubitt, Chairman of the Board of Directors of the EFSE. “Through financially sustainable institutions such as ARARATBANK, the EFSE is supporting growth and development of Armenia’s MSEs, which are a key element for economic development in terms of their contribution to employment and economic growth.”

Mr Ashot Osipyan, Chairman of the Executive Board of ARARATBANK, appreciating the cooperation between European Fund for Southeast Europe (EFSE) and ARARATBANK OJSC, stated that the 10 million US dollar credit line is already the second project implemented in cooperation with EFSE. He added: “I am extremely gratified that the cooperation between ARARATBANK OJSC and our respected partner, the European Fund for Southeast Europe, which has significant experience in the region and in former Soviet Union countries, has proved such a success within such a short timeframe. Since October 2010, when the USD 5 million loan agreement was signed, we have on-lent funds to micro and small businesses for approximately 110 credit projects. The EFSE’s loan enabled us to provide our clients with increased credit availability and more competitive conditions, and to diversify our loan portfolio”.

Mr Ashot Osipyan emphasised that this new credit line of 10 million US dollars is expected to have a significant impact on the development of micro and small businesses in Armenia, affording an opportunity to prosper and implement new business projects for many existing and new loan customers. As one of Armenia’s leading banks in the area of micro and small business finance, ARARATBANK OJSC intends to, within the framework of its development mission, enlarge its loan volume and geographic reach. The Bank will also continue to strengthen its productive cooperation with the European Fund for Southeast Europe in the future.

ARARATBANK is among the most experienced banks in the area of SME and MSE lending in Armenia. ARARATBANK’s loan portfolio has experienced dynamic and sustainable growth since 2007 thanks to modern lending technologies and methods, its professional and highly qualified staff, and its wide-ranging branch network. In 2010, loan volume grew by 57%, and an increase of 15% has been reported for the first quarter of 2011.

About the European Fund for Southeast Europe
The European Fund for Southeast Europe (EFSE) aims to foster economic development and prosperity in Southeast Europe and the European Eastern Neighbourhood region, including Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, FYR Macedonia, Georgia, Kosovo, Moldova, Montenegro, Romania, Serbia, Turkey and Ukraine. It channels long-term finance primarily for micro and small enterprises (MSEs) and for private households in the form of home improvement loans through locally based financial institutions. As access to finance is seen as a key success factor for the development of the micro, small and medium enterprise segments, the EFSE focuses on assisting local financial sectors in strengthening their ability to ensure adequate and sustainable financing. Supporting the EFSE’s investment activities is the EFSE Development Facility, which provides partner lending institutions with technical assistance, consulting and training services to build their operational capacities and professional management. The EFSE was initiated by KfW Entwicklungsbank (The German Development Bank) on 15 December 2005 from four multi-donor programs managed by the bank. The EFSE is the first public-private partnership of its kind and the first privately managed fund in development finance to leverage private funding for MSE finance in the target region. Capital is provided by donor agencies, international financial institutions and private institutional investors, including the German Federal Ministry for Economic Cooperation and Development, the European Commission, the Government of Albania as the first EFSE shareholder from the EFSE’s target region, the Oesterreichische Entwicklungsbank (OeEB, the Development Bank of Austria), the Swiss Agency for Development and Cooperation (SDC), the Danish International Development Agency (Danida), KfW Entwicklungsbank as Lead Investor, the International Finance Corporation (IFC), the Netherlands Finance Company (FMO), the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) as well as Sal. Oppenheim and Deutsche Bank. Oppenheim Asset Management Services S.à.r.l, Luxembourg, and Finance in Motion GmbH, Germany, are, respectively, the EFSE’s Fund Manager and Fund Advisor.

About ARARATBANK
ARARATBANK was established as a result of reorganisation of Haykapbank, operating on the Armenian financial market since 1991 and as an open joint stock company since August 2007. ARARATBANK is a dynamic bank with a focus on the MSME sector and a strong market position in small and medium business development. As a universal bank, ARARATBANK offers a broad range of services in Armenian dram as well as foreign currencies for individuals and corporate clients. ARARATBANK is a leader in the Armenian credit and debit card market as well as in retail financial services, including remittances. ARARATBANK participates in the Trade Facilitation Program (TFP) in cooperation with EBRD (European Bank for Reconstruction and Development) and has been recognised by EBRD as the most active issuing bank in Armenia in 2010. ARARATBANK has a wide branch network, with 34 branches throughout the country. ARARATBANK is partner to a number of respected international financial organisations, such as the World Bank, EBRD, and KfW. As at 31 December 2010, total assets of the Bank amounted to AMD 62.9 billion, up AMD 19.5 billion or 44.82 % versus previous year. Liabilities totalled AMD 52.7 billion, up AMD 17.2 billion or 48.34% versus previous year. Total capital as at 31 December 2010 was AMD 10.3 billion, up AMD 2.3 billion vs. previous year.

For further information about ARARATBANK, please visit: www.araratbank.am

Media contact EFSE
Samir Djikić Manager Communications Tel: +49 (0)69/977 876 50-26 E-mail: press@efse.lu