(ARKA) - The EBRD lent $5mln to the Armenian Inecobank to provide finance for micro and small enterprises, the EBRD office in Armenia reports.
The EBRD will also increase Inecobank's limit under the Trade Finance Programme to $1 million, reports Trend.
Technical cooperation funds provided by USAID and the EBRD's Early Transition Countries Multi-donor Fund will complement the agreement and be used to strengthen lending procedures and skills at Inecobank.
The EBRD loan is intended for on-lending to local micro and small enterprises thus addressing a major constraint for the growth of this segment of the economy. "At present the still very small Armenian banking sector does not deliver finance to micro and small enterprises on a large and sustainable scale. By broadening Inecobank's potential customer base, the loan will also support the bank's expansion," the EBRD's press release reports.
Inecobank and the EBRD have been in cooperation since 2005 when the Armenian bank received the first $1 million loan to expand its capacity to serve micro and small enterprises. In the same year Inecobank also joined the EBRD's Trade Finance Programme which supports the bank's activity in terms of foreign trade lending.
"The new loan is expected to boost the involvement of an important local bank in financing the real economy. This will benefit the economy in general, but will also foster growth in the banking sector. Facilitating micro and small enterprises' access to finance will support the development of a vibrant segment of the Armenian economy, which serves as the country's engine for growth," said Michael Weinstein, head of the EBRD's office in Armenia.
Mher Grigorian, Inecobank's CEO said that he welcomed this EBRD loan. "Not only will it ensure that Inecobank could meet the growing demand for the resources of developing businesses, but it also emphasises EBRD's confidence in our bank," he said.
The Armenian economy has been growing tangibly over the recent years. GDP grew by 14% in real terms in 2005, exceeding the 1989 output level for the first time. According to the recently published Transition Report, the EBRD forecasts GDP's estimated growth rate of 8.5 per cent.
Inecobank CJSC was incorporated on February 7, 1996. Since 1997, the bank has been the first in Armenia to service trade of goods of wide consumption on credit. The bank's assets as of September 30, 2006 totaled amd 20.7bln, the total capital - AMD 5.8bln, the balance sheet profit - AMD 2.1bln. The amount of the bank's authorized capital is AMD 2.4bln.
Inecobank's shareholders are ShoreCap International Company with the share of 13.5%, founded in 2003 by the American ShoreBank Corporation, and also the International Finance Corporation with the share of 10%.