The European Bank for Reconstruction and Development (EBRD) is providing a US$3mn co-financing facility to Armenian Economy Development Bank (AEB/Armeconombank). This 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, designed to share with local banks the risk of lending to potential borrowers. The facility comprises a US$1.5mn loan to AEB which will be used for on-lending to the bank’s clients, and another US$1.5mn participation facility under which the EBRD will take on the client’s direct risk.


This will facilitate financing Armenian medium-sized enterprises with good credit history and proven track records. Sub-loans will be up to US$1mn and will be targeted to finance companies “capital expenditure and working capital needs.


The EBRD took a stake of 25% 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% of shares in Armeconombank. The EBRD has a seat on the bank’s supervisory board.