IFC Supports the Growth of SME and Mortgage Lending in Armenia
In Yerevan
Nerses Karamanukyan
Tel.: +(374) 10 54 52 41
E-mail: nkaramanukyan@ifc.org
Yerevan, Armenia, February 27, 2007
– Today, IFC, the private sector arm of the World Bank Group, announced
financing of Armeconombank, a fast-growing private bank in Armenia. With
IFC’s $2 million loan, Armeconombank will further expand its SME and mortgage
lending.
Lack of access to term funding is among
the top five constraints to the growth of Armenia’s private sector, according
to a 2005 survey by the World Bank. The tenor of IFC’s financing, which
includes a $1 million five-year loan for on-lending to SMEs and a $1 million
eight-year loan for housing finance, will allow Armeconombank to meet the
high demand for longer-term funding than is currently available in the
market as well as expand its lending portfolio. In addition, IFC will advise
the bank on best practice standards for mortgage lending.
IFC began working with Armeconombank
in 2004, with a $2 million loan to the bank that was IFC’s first investment
in Armenia’s banking sector. Through its partnership with IFC, Armeconombank
has become a leader in funding SMEs, which constitute the majority of the
country’s private sector, and was among the first to introduce mortgage
financing to individuals for the acquisition and upgrade of residential
real estate. To date, the bank has made more that 30 loans to Armenian
SMEs, with an average loan size of $47,000. It has also made 74 home
acquisition and improvement loans to individuals, with an average size
of $7,000, drawing on proceeds of the loan IFC extended in 2004.
Jerome Sooklal, Director of IFC’s Central
and Eastern Europe Department, said, “IFC’s key objective in Armenia
is to support further development of the private sector. A well-developed
financial sector is a central component in enterprise growth. IFC is proud
to continue its support of Armeconombank, helping expand access to finance
and making a range of financial products available to the country’s real
sector.”
David Sukiasyan, CEO of Armecomonbank,
commented, “The new long-term finding from IFC will help us strengthen
our bank’s position in the market and better serve our clients. We are
looking forward to further deepening of our partnership with IFC.”
About IFC
IFC, the private sector arm of the World
Bank Group, promotes open and competitive markets in developing countries.
IFC supports sustainable private sector companies and other partners
in generating productive jobs and delivering basic services, so that people
have opportunities to escape poverty and improve their lives. Through FY06,
IFC Financial Products has committed more than $56 billion in funding for
private sector investments and mobilized an additional $25 billion in syndications
for 3,531 companies in 140 developing countries. IFC Advisory Services
and donor partners have provided more than $1 billion in program support
to build small enterprises, to accelerate private participation in infrastructure,
to improve the business enabling environment, to increase access to finance,
and to strengthen environmental and social sustainability. For more information,
please visit www.ifc.org.
Armenia became a shareholder and member
of IFC in 1995. IFC began investing in the country in 2000. As of February
2007, IFC has invested $20.6 million to support financial institutions,
small retailers, and the hotel industry. In addition, IFC has provided
advisory services on corporate governance, improvement of the investment
climate, and small and medium enterprise development. For more information,
please visit www.ifc.org/armenia.
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