EDB and Areximbank-Gazprombank Group sign a loan agreement to finance small and medium-sized businesses

Yerevan, 12 March 2012. On 12 March 2012 the Eurasian Development Bank (EDB) signed a US $10 million loan agreement with Areximbank-Gazprombank Group under its programme to finance small and medium-sized businesses (SMB). The agreement was signed by Dmitry Zhurba, Deputy Chairman of the Executive Board, on the part of the EDB and Armen Khandkaryan, General Director, on the part of Areximbank-Gazprombank Group.

In his welcome speech Dmitry Zhurba, Deputy Chairman of the EDB Executive Board, said that the EDB deemed it very important to support small and medium-sized businesses in Armenia since they formed the basis for its socioeconomic development. «This loan means that the EDB is confident of Areximbank-Gazprombank Group’s strategy and prospects and it will be used to enhance the range of banking services provided to small and medium-sized businesses,» Dmitry Zhurba said.

In his response, Armen Khandkaryan, General Director of Areximbank-Gazprombank Group, said that he deemed the development of small and medium-sized businesses one of the promising areas of the bank’s work. He also said that over the last two years that bank had significantly increased lending to SMB within the refinancing programme of the Central Bank of the Republic of Armenia and had become one of the top three Armenian banks providing loans to SMB. Areximbank-Gazprombank Group cooperates in this area with international financial institutions, including the World Bank and KfW, a German development bank. In addition, the Bank is a proactive participant in a mortgage programme in the framework of the KfW programme and the Rural Economic Development programme (IFAD). «The signature of the agreement with the Eurasian Development Bank will be a new impetus to enhancing the bank’s opportunities in financing small and medium-sized businesses,» Armen Khandkaryan emphasised in conclusion.

The cooperation with the EDB goes beyond this agreement. Areximbank-Gazprombank Group is negotiating with the EDB a loan facility to develop trade finance as well as financing for energy-saving projects.

Additional Information

The Eurasian Development Bank (EDB) is an international financial institution with the mission to facilitate economic growth in its member states, the expansion of trade and other economic ties between them and the development of integration processes in Eurasia.

The Bank was founded under an interstate agreement signed on 12 January 2006 by authorised representatives of the Russian Federation and the Republic of Kazakhstan. The idea to establish the Bank was proposed by the presidents of Russia and Kazakhstan.

The Bank’s proactive work in Eurasia made it practically possible for other states to become its members. The Republic of Armenia joined the EDB in April 2009, the Republic of Tajikistan in June 2009, the Republic of Belarus in June 2010 and the Kyrgyz Republic in August 2011. These countries have fulfilled all the procedures to join the Bank and become its fully-fledged members.

The Bank finances investment projects in its member states for a total of almost US $2.6 billion. It is also expanding its loan portfolio and the range of products. International rating agencies rate the Bank at the level of the sovereign ratings of its founder states or higher.

Areximbank-Gazprombank Group, a closed joint-stock company, was founded in 1998 to support businesses and service financial flows between Russia and Armenia. In 2007 the Bank became a wholly owned subsidiary of Russia’s largest bank Gazprombank, an open joint-stock company, whose entrance into the Armenian financial market was inspired by the growth of Russian investments in the Armenian economy, the demand of its large corporate clients for comprehensive banking services, and the need to finance Gazprom’s projects in Armenia. The bank’s clientele comprises over 53,000 private and 2,000 corporate clients, including ArmRosgazprom, the Electric Networks of Armenia, the International Energy Corporation, VivaCеll-MTS (a telecommunications operator), RusAl-Armenal (an aluminium foil mill), Gazpromenergo’s Armenian office, and the Razdan power plant. 

The bank’s customers also include Armenian largest institutions of higher education: the Russian-Armenian (Slavonic) University, the American University of Armenia, and the State Engineering University of Armenia, among others. The bank uses significant efforts to attract export-orientated companies, in particular those operating in non-ferrous metallurgy, jewellery production, construction materials, agricultural processing, and small and medium-sized businesses. The bank’s priority areas of operation include project financing for large corporate clients, primarily in the country’s strategic industries, the power sector in particular, loans for small and medium-sized businesses, payment cards,e-banking, and international money transfers through payment systems and ATMs. Areximbank-Gazprombank Group is a member of VISA and MasterCard, world’s largest payment systems, and the local payment system ArCa. In 2010 the bank was successfully certified for compliance with ISO 9001:2008. The bank has sixteen offices, including nine in Armenia’s regions and seven in Yerevan.

The bank’s development programme for2012—2014 sets forth the objectives, which are expected to produce financial indicators within three years that will make the bank one of the leaders of the Armenian financial market. The bank’s financial development model expects its charter capital to increase by US $10 million by the end of 2012 and reach 16 billion dram (US $41 billion). The bank’s assets and loan portfolio are expected to double over three years, its liabilities to increase by 105% and its net profit 115%.

In 2011 almost all Areximbank-Gazprombank Group’s key financial indicators, including its assets, loan portfolio and income, increased by almost 50%. The assets totalled almost 96 billion dram (US $250 million), liabilities over 80 billion dram (US $210 million), and equity over 15.7 billion dram (US $41 million). The loan portfolio reached almost 75 billion dram (US $195 million), including loans to corporate clients for a total of 62 billion dram (US $162 million) and loans to private clients for a total of 13 billion dram (US $33 million). Before the end of 2012 Areximbank-Gazprombank Group plans to increase its loan portfolio to 93 billion dram (US $240 million).