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WESTERN BANKS UNVEIL 'HISTORIC' LENDING SCHEME FOR ARMENIA
By Anna Saghabalian
Radio Liberty, Czech Rep.
Aug 3 2007
The European Bank for Reconstruction and Development (EBRD) and
a leading U.S. financial services group unveiled on Friday a joint
lending program for small and medium-sized Armenian companies seeking
cheap credit.
The EBRD and the Citigroup financial conglomerate said they will
each lend $6 million to one of Armenia's largest commercial banks,
ACBA-Credit Agricole, that will manage the scheme. Under the terms
of an appropriate agreement signed in Yerevan by the three sides,
ACBA-Credit Agricole will in turn use the money to extend loans to
expanding small and medium-sized firms.
According to the ACBA chairman, Stepan Gishian, the maximum amount
of a single loan to be provided under the scheme will be set at
$300,000. He could not specify the cost of such borrowing, saying
only that it will be below his bank's current lending rates.
ACBA, in which the French bank Credit Agricole is the principal
shareholder, currently makes loans repayable in up to five years, with
interest rates varying from 16 to 22 percent. With inflation in Armenia
remaining in single digits and the national currency increasingly
strong, such rates are hardly affordable for many small firms.
Officials present at the signing ceremony, emphasized the fact that
it is the first time that an Armenian bank borrows a substantial
amount of cash from a Western bank on a commercial basis. "We are
talking about purely market-based relations," Gishian said, pointing
out that similar lending programs have until now been implemented in
Armenia only by non-commercial development institutions like the EBRD
and the World Bank.
Michael Weinstein, head of the EBRD office in Yerevan, described
the deal as a "historic" event for Armenia. He said the London-based
lending agency helped to negotiate it as part of its growing presence
in the country. "We now pay a lot of attention to the Caucasus region
and Armenia in particular," he said. "We hope that our involvement
in Armenia will continue and deepen."
The EBRD has spent some $180 million on loans to and equity purchases
in various Armenian companies ever since it opened an office in Yerevan
in the mid-1990s. A large part of the sum has reached the country in
the past few years.
By Anna Saghabalian
Radio Liberty, Czech Rep.
Aug 3 2007
The European Bank for Reconstruction and Development (EBRD) and
a leading U.S. financial services group unveiled on Friday a joint
lending program for small and medium-sized Armenian companies seeking
cheap credit.
The EBRD and the Citigroup financial conglomerate said they will
each lend $6 million to one of Armenia's largest commercial banks,
ACBA-Credit Agricole, that will manage the scheme. Under the terms
of an appropriate agreement signed in Yerevan by the three sides,
ACBA-Credit Agricole will in turn use the money to extend loans to
expanding small and medium-sized firms.
According to the ACBA chairman, Stepan Gishian, the maximum amount
of a single loan to be provided under the scheme will be set at
$300,000. He could not specify the cost of such borrowing, saying
only that it will be below his bank's current lending rates.
ACBA, in which the French bank Credit Agricole is the principal
shareholder, currently makes loans repayable in up to five years, with
interest rates varying from 16 to 22 percent. With inflation in Armenia
remaining in single digits and the national currency increasingly
strong, such rates are hardly affordable for many small firms.
Officials present at the signing ceremony, emphasized the fact that
it is the first time that an Armenian bank borrows a substantial
amount of cash from a Western bank on a commercial basis. "We are
talking about purely market-based relations," Gishian said, pointing
out that similar lending programs have until now been implemented in
Armenia only by non-commercial development institutions like the EBRD
and the World Bank.
Michael Weinstein, head of the EBRD office in Yerevan, described
the deal as a "historic" event for Armenia. He said the London-based
lending agency helped to negotiate it as part of its growing presence
in the country. "We now pay a lot of attention to the Caucasus region
and Armenia in particular," he said. "We hope that our involvement
in Armenia will continue and deepen."
The EBRD has spent some $180 million on loans to and equity purchases
in various Armenian companies ever since it opened an office in Yerevan
in the mid-1990s. A large part of the sum has reached the country in
the past few years.