The European Bank for Reconstruction and Development (EBRD) is providing a US$3mn financing to the Agricultural Cooperative Bank of Armenia (ACBA). The loan is the first in Armenia of a new type of EBRD instrument, the Medium-Sized Loan Co-Financing Facility (MCFF).


The MCFF is one of several instruments offered in Armenia, Azerbaijan, Georgia, the Kyrgyz Republic, Moldova, Tajikistan and Uzbekistan, the bank’s seven lowest-income countries of operation, under the Early Transition Countries (ETC) initiative. This initiative, launched by the EBRD in 2004, aims to stimulate market activity by using a streamlined approach to financing more and smaller projects, mobilising more investment, and encouraging economic reform. The initiative is part of an international effort to address poverty in these members of the Commonwealth of Independent States (the former Soviet Union). The bank will accept higher risk in the projects it finances in the ETCs, while still respecting the principles of sound banking.

The MCFF is available to banks with strong credit policies and procedures, but which are limited in the loans they can provide to local corporate clients. It allows ACBA to co-finance, with the EBRD, bigger sub-loans to its clients and share with the EBRD any risks involved with such lending. While ACBA’s internal credit procedures have until now limited any credit exposure per single borrower to a maximum of US$180,000, with the help of the MCFF it will be able to offer its most trusted and financially viable clients from US$400,000 to US$1mn.

ACBA was created in 1996 to help farmers find finance after Armenia privatised state-held land. It was modelled on France’s Credit Agricole. Its structure – with collective ownership based on village cooperative associations, and coffers swelled at the grassroots by more than 20,000 farmers “sign-up fees of US$10 – is unique in the former Soviet space.

ACBA has since developed business outside agriculture in almost all areas of the economy. ACBA is now Armenia’s largest bank by capitalisation, and generates solid profits, says Michael Weinstein, head of the EBRD’s Armenia resident office.