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Armenia’s AEB sign $3m co-finance deal with EBRD
Armeconombank will use funds for on-lending to clients
The European Bank for Reconstruction and Development is providing a $3 million
co-financing facility to Armenian Economy Development Bank (AEB, or
Armeconombank). Armeconombank is Armenia’s fifth largest bank by assets in a
sector encompassing 21 privately owned banks.
The funds come via the EBRD’s Medium Sized Co-Financing Facility, which is
designed to share with local banks the risk of lending to potential borrowers.
The facility consists of a $1.5 million loan to Armeconombank, which will be
used for on-lending to the bank’s clients, and another $1.5 million
participation facility under which the EBRD will take on the client’s direct
risk.
This will facilitate the financing of Armenian medium sized enterprises with
good credit history and proven track records. Sub-loans will be up to $1
million and will be targeted to finance companies’ capital expenditure and
working capital needs.
The EBRD took a stake of 25 per cent plus one share in Armeconombank in
December 2004, its first equity participation in a locally owned Armenian
bank. It has had a relationship with the Armenian bank and its majority
shareholders, the Sukiasyan family, since 2000.
The Sukiasyans bought Armeconombank in 1997 and returned it to profitability
from 2000 onwards. The Bank and the Sukiasyans jointly hold more than 75 per
cent of shares in Armeconombank. The EBRD has a seat on the bank’s supervisory
board.
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