YEREVAN, October 5, /ARKA/. The European Bank for Reconstruction and Development (EBRD) has signed a $5mln loan agreement with Armenian Araratbank. The funds will be on-lent as loans to small and medium businesses, Araratbank press service reported. It said the agreement was signed by Araratbank board chairman Ashot Osipyan and head of the EBRD Yerevan Office Valeriu Razlog.

‘The new agreement signed by Araratbank and EBRD is a natural continuation of their long-term cooperation started in 2008,’ Araratbank said in a statement.

In 2008 January the EBRD extended a USD 5 million credit line and a USD 1 million limit under its Trade Facilitation Program to Araratbank. The financial package was complemented by a technical cooperation grant for institution building. The loan, which came under the Armenian Multi-Bank Framework II, was provided for on-lending to micro, small and medium-sized enterprises, thereby addressing a major constraint for economic growth.

In the next move the EBRD acquired a 25% plus one stake in Araratbank. The EBRD’s investment supported the development of Araratbank’s retail, medium, small and microfinance lending programs. Growth was achieved by attracting new customers through diversification of its product range, increasing regional branch network and further improving its service culture.

In 2010 May EBRD increased its capital in Araratbank by approximately $600,000, through a subscription to new shares. Previously the Bank provided Araratbank a $5 million credit line for micro, small and medium-sized enterprises, $2 million under the Bank’s Medium-Sized Co-financing Facility Framework for provision of corporate loans to medium and large-sized enterprises, and a $2 million trade finance facility.

“We appreciate our cooperation with EBRD. As a result of our joint activity, we have obtained not only banking technologies of international standard and management systems, but also have gained great experience, which serves our clients, our stable development and Araratbank image,” Ashot Osipyan was quoted as saying..

Araratbank was set up in 1991. Some 74.18% of its shares are owned by Barsegh Beglarian, the owner of the largest petrol trader Flash and the remaining shares are owned by minority shareholders.

Overall, since the beginning of its operations in Armenia, the EBRD has committed over €393 million in 77 projects in the financial, corporate, infrastructure and energy sectors. -0-