Who is our client
ARARATBANK OJSC is a mid-sized universal bank in Armenia focusing on Micro, SME and Retail customers. The bank operates the 5th largest branch network in the country and employs around 1025 staff. Araratbank is an existing client of FMO since 2014 in the area of funding and technical assistance.
The new loan of up to USD 25 million is used to finance eligible Micro, Youth, Women and Agricultural customers of the bank in line with FMO's eligibility criteria, supporting our impact goal of reducing inequalities. The new loan is partly funded by FMO-A and partly by 3rd party investors mandated by FMO Investment Management, which supports our goal to mobilize commercial investor funds.
Why we fund this project
FMO's loan is used by Araratbank to finance their Micro, Small and Medium Enterprises (MSME) portfolio. MSME are the core of the Armenian economy. The private sector in Armenia is dominated by MSME’s, making up about 98% of total registered enterprises. However, they contribute only for ~25% of GDP and ~19% of employment (source: EU4Business report June 2019). Access to credit remains critical for further development of the MSME segment. More specifically, the loan proceeds will be used to finance a combination of Micro clients and eligible women/youth/agriculture clients of the bank. In turn, this supports job creation and maintenance in a Low to Middle Income Country (LMIC) where ~42% of the population live below the poverty line (Worldbank, $5.50/day poverty line) and unemployment rate is ~17% (~35% for youth).
Environmental and social rationale
The project has been categorized as Category C in accordance with FMO’s Sustainability Policy. The Project’s activities are deemed to have minimal or no adverse environmental and social risks and/or impacts. As part of the Project, Araratbank is required to apply the EDFI Exclusion List and (Country) E&S laws and regulations.
|Date||Total FMO financing|
|10/22/2019||USD 10.00 MLN|
|4/12/2018||USD 20.00 MLN|
|2/26/2016||USD 7.50 MLN|
|9/26/2014||USD 10.00 MLN|
- Website client
- Europe & Central Asia
- Financial Institutions
- Signing date
- Total FMO financing
- USD 25.00 MLN
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C)