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Araratbank 2 - SME Financing

Armenia | Financial Institutions

Identification Code:: OP/16/0012
Total Operation Cost:: 5.000.000 USD
Maturity:: 60 months
Operation Status:: BSTDB Approved Amount – Approval Date

5.000.000 USD – 23 Sep 2016
: BSTDB Signed Amount – Signed Date

5.000.000 USD – 14 Nov 2016
: Status:
Completed
Description and Purpose of the Operation:: Provision of the second Loan for SME financing purposes of USD 5 million to ARARATBANK OJSC, Armenia. The proceeds of the Loan shall be used by the Borrower exclusively for the purpose of providing loans to SMEs eligible in accordance with the eligibility criteria agreed with the Bank. The Loan aims to contribute towards expanding the SME lending program of one of the leading Armenian banks and to better serve the growing SME financing needs of Armenian entrepreneurs.
Countries of Operation:: Armenia (100,00%)
Financial Product:: SME's
Sector:: Financial Institutions
Domain:: Private
Borrower/Client:: Araratbank OJSC, Armenia
Co-Financers/Participants:: n/a
Guarantors/Sponsors:: n/a
Developmental and Regional Cooperation Impact:: The operation is expected to have modest but favorable economic benefits for the Armenian economy and to the regional cooperation (to the extent SMEs benefiting from financing from the operation engage in export activities). 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 ARARATBANK OJSC, resulting in further business growth, stronger balance sheet, improved liquidity and profitability.
Environmental Classification and Impact:: ARARATBANK OJSC is an existing Borrower since 2013 and the accumulated experience in terms of meeting BSTDB's environmental and social (E&S) requirements towards financial intermediaries is generally positive. The Borrower has developed and is implementing a basic E&S management system, consisting of the E&S Risk Management Policy and the E&S Risk Management Procedure. The system is compliant with good international practices, and is integrated in the overall portfolio management. The general responsibilities for E&S risks are assigned to a representative of the senior management, and the daily management is undertaken by the E&S Risk Manager. The portfolio analysis shows that most of its operations are of limited and low E&S risk and impact and are compliant with the BSTDB E&S Exclusion List (financed from the Bank's proceeds). Among other sectors, the Borrower supports energy efficiency sector, renewables, sustainable agribusiness, occupational health and safety improvements, and social investments. The Borrower also supports alcoholic beverages sector, however the share in its total portfolio is within the threshold of 10% of the total, as specified by the E&S Exclusion List of BSTDB.
Operation Leader:: Financial Institutions II
E-mail:: fi2@bstdb.org