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Ardshinbank 3 - SME financing

Armenia | Financial Institutions

Identification Code:: OP/16/0011
Total Operation Cost:: 10.000.000 USD
Maturity:: 60 months
Operation Status:: BSTDB Approved Amount – Approval Date

10.000.000 USD – 21 Apr 2016
: BSTDB Signed Amount – Signed Date

10.000.000 USD – 01 Jul 2016
: Status:
Completed
Description and Purpose of the Operation:: Provision of the second Loan for SME financing of USD 10 million, secured, to Ardshinbank, Armenia to be used exclusively for the purpose of financing eligible SME loans, thus assisting the further development of the Borrower's SME lending program and accommodating the needs of the growing SME market in Armenia.
Countries of Operation:: Armenia (100,00%)
Financial Product:: SME's
Sector:: Financial Institutions
Domain:: Private
Borrower/Client:: Ardshinbank, Armenia
Co-Financers/Participants:: .
Guarantors/Sponsors:: .
Developmental and Regional Cooperation Impact:: The proceeds of the Loan shall be used by the Borrower exclusively for the purpose of providing loans to eligible SMEs. The Loan will facilitate: 1) Access of SMEs to Medium-term funding for their capital expenditures and working capital needs; 2) Development of the country economy through job creation, income generation, improved company infrastructure. It will also increase trade turnover among BSEC countries. 3) Institutional development of ASHIB, resulting in further business growth, stronger balance sheet, improved liquidity and profitability; The facility will have a modest but positive impact upon regional cooperation, as certain other BSEC countries such as Georgia, Russia and Ukraine are important export destinations for Armenia, It is a fair guess that at least some of the proceeds of the loan will contribute to greater intra-regional trade.
Environmental Classification and Impact:: Ardshinbank is an existing Borrower of the Bank since 2012 and the accumulated experience in terms of E&S performance has been positive. The Borrower has developed and implemented an acceptable E&S management system, in line with IFC and BSTDB requirements for FI Borrowers. The E&S system is integrated in the general risk management system and is applied to the entire portfolio management, including monitoring. The portfolio analysis for 2014 suggests that the Borrower is engaged in SMEs transactions of high E&S risk category, namely in energy, mining, and construction sectors. These transactions are subject to relevant risk assessments, identification of mitigation measures, transposing these into terms and conditions of financing and periodic monitoring. In terms of mortgage financing the Borrower did not report any outstanding E&S issues arising from such transactions. The Borrower also provided evidence that it is not engaged in financing activities stipulated in the Bank's E&S Exclusion List. The reporting over the years has been accurate, comprehensive and timely. For the purpose of this operation the following E&S terms and conditions of financing are recommended: 1) the Borrower to remain compliant at all times with E&S legal requirements in effect in the Republic of Armenia; 2) to ensure its E&S management system is applied for high and medium E&S risk category SMEs sub-loans; 3) to follow the BSTDB E&S Exclusion List; and 4) to submit to the Bank annual E&S performance reports.
Operation Leader:: Financial Institutions II
E-mail:: fi2@bstdb.org