Ardshinbank CJSC - NASIRA PORTFOLIOStatus: Proposed investment
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Who is our prospective customer?
Ardshinbank CJSC (“the bank”) is a new relationship for FMO, and a leading bank in Armenia, ranking 1st in the sector when measured by assets (USD 3.89 bln, 18.5%) and 2nd by net loan portfolio (USD 1.44 bln, 12.7%). The bank offers a full range of banking services and retains a strong franchise in both Corporates (41% of Gross Loan Portfolio), Retail (48%) and Micro-, Small- and Medium-sized Enterprises (MSME) (11%) customers thanks to its extensive network of 62 branches spanning across the country. It is the only private entity in Armenia with assigned ratings from all three rating agencies: S&P (B+), Moody’s (Ba3) and Fitch (BB-). The bank is privately owned by Mr. Karen Safaryan, who owns close to 99% of the shares of the bank.
What is our funding objective?
The proposed transaction is a USD 20 mln NASIRA Risk Sharing Facility (RSF) with Ardshinbank. NASIRA is a financial program supported by the EU and the Dutch Government. Through its controlled risk environment, the NASIRA RSF will bolster Ardshinbank's endeavors to expand its MSME portfolio. The facility places particular emphasis on empowering Young and Women entrepreneurs by supporting their income generating business activities, thereby aligning with FMO’s goal in Reducing Inequalities. The NASIRA transaction will support Ardshinbank in achieving its strategic goal of growing its MSME customer base.
Why do we want to fund this investment?
Armenia remains a lower middle-income country, as a vast part of its population (29%) lives below the poverty line. Despite the significant presence of MSMEs in the country, their contribution is only about 25% of the country's GDP and around 19% of employment, as the sector has limited access to credit. Due to this, MSMEs are fundamental to the overall socio-economic development of the country. FMO will be directly sharing the risk of the loan portfolio of MSMEs with Ardshinbank, while 50% of the limit will be geared towards Young and Women entrepreneurs, hence qualifying for a 50% RI Label. As a result, the NASIRA RSF facility will incentivize Ardshinbank to finance the underserved and marginalized communities in Armenia, thus supporting the country's economic development. Lastly, the transaction is additional as there are hardly any alternative products available in the market which offer similar portfolio protection as NASIRA does.
What is the Environmental and Social categorization rationale?
Ardshinbank is categorized as Financial Institutions (FI) A (high risk) in accordance with FMO’s Sustainability Policy. The bank is classified as FI-A E&S risk category given their exposure to high E&S risk sectors (mining, metallurgy, construction, energy projects, etc.) in combination with a high concentration of corporate lending. The Bank's E&S risk profile is not expected to significantly change in the short-term. As a part of the transaction, Ardshinbank is required to apply the EDFI Exclusion List, Armenia’s E&S laws and regulations, the IFC Performance Standards for applicable transactions, and to follow an agreed Environmental and Social Action Plan.
|Date||Total FMO financing|
|10/13/2023||USD 0.40 MLN|
- Europe & Central Asia
- Financial Institutions
- Publication date
- Deadline for feedback
- Total FMO financing
- USD 18.60 MLN
- FMO NV
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)