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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 22531 |
| Project name | Armeconombank |
| Country | Armenia |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Armeconombank |
| Environmental category | FI-2 |
| Date SPI disclosed | May 3, 2004 |
| Projected board date | June 3, 2004 |
| Status | Active |
| Previous Events | Invested: August 2, 2004
Signed: June 22, 2004
Approved: June 16, 2004 |
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| Description of company and purpose of project |
| Armeconombank (AEB or the bank) is one of the largest, privately controlled banks in Armenia and is the successor of Zhilsotzbank, one of the former state-owned banks. It is the 4th largest bank in Armenia in terms of assets, with 24 branches across the country and 450 employees. Today the bank focuses on serving SMEs, retail clients, and financial institutions. AEB had the net worth of approximately $5.3 million and total assets of approximately $33.4 million equivalent as of the end of 2003. The proposed $2.0 million senior loan to AEB, to broaden the bank’s funding base for on-lending to SMEs and for residential housing projects, would be IFC’s first investment in the Armenian commercial banking sector. IFC will also consider an equity investment of up to $1.0 million to support AEB’s capital base. |
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| Project sponsor and major shareholders of project company |
| The bank is majority-owned by Sukiasyan family (68%) and 1,400 minority shareholders. The Sukiasyan family controls the SIL Group, an industrial holding composed of over 20 private enterprises engaged in production, trade, construction, services, and banking. The SIL Group first began its activities in 1989, as one of the first limited liability companies in Armenia and today has about 6,500 employees. |
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| Total project cost and proposed IFC investment |
| The project consists of a $2.0 million senior loan to Armeconombank to broaden the bank’s funding base for on-lending to SMEs and for financing residential housing projects and an equity investment of up to $1.0 million to support the Bank’s capital base. |
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| Location of project and description of site |
| Armeconombank is headquartered in Yerevan and has 24 branches across Armenia. |
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| Project Development Impact and IFC's Role |
The underdeveloped banking sector impedes Armenia’s economic growth and limits local business access to longer term financing. Current lending environment favors businesses with short-term trade finance needs and companies that can provide substantial collateral coverage in the form of real estate, precious metals, and other highly liquid assets.
The development impact of the project is expected to be significant in terms of its support for local businesses in real economy. By providing financing to AEB, IFC will enable the bank to expand its lending operations and provide commercial financing to businesses in a variety of sectors, therefore fostering economic growth and employment generation. In addition, as the first IFC investment in Armenian commercial banking sector, the project will have an important demonstration effect for other potential foreign investors.
IFC’s role in this project is to assist AEB in sourcing commercial finance. In addition, IFC will help one of the most active lending banks in Armenia to expand its financing to SMEs and for residential housing projects. Further, the project will represent a signal of support to the local banking sector and a stamp of approval for AEB in particular. |
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| Environmental and social issues - Category FI-2 |
This is a Category FI type 2 project according to IFC's environmental and social review procedure. AEB will be required to establish an environmental management system satisfactory to IFC, to ensure that lending under this project complies with applicable host country requirements and IFC's Exclusion Lists, policies, and guidelines. Any investment by AEB in a Category A project will require the prior approval of IFC. AEB will designate two key staff who will have responsibility for environmental affairs, and who will attend IFC's environmental workshop; and AEB will submit Annual Environmental Performance Reports to IFC.
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| To contact the project company, please write to: |
Mr. Ashot Osipian, General Director
23/1 Amiryanstr,
Yerevan 375002
Phone: ++3741 53 48 31
Fax: ++ 3741 53 89 04 |
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