OREANDA-NEWS. January 09, 2007. The EBRD is extending a USD 5 million credit line and a USD 1 million limit under its Trade Facilitation Programme to Araratbank, a privately-owned Armenian bank set up in 1991. The financial package will be complemented by a technical cooperation grant for institution building, reported the press-centre of EBRD.

The loan, which comes under the Armenian Multi-Bank Framework II, will be provided to Araratbank for on-lending to micro, small and medium-sized enterprises, thereby addressing a major constraint for economic growth. Despite strong growth in recent years, Armenia’s economic potential remains constrained by difficulties in access to medium and long term finance.

The trade finance limit will allow Araratbank to roll out its trade finance operations and to start offering these products to clients. Armenian banks still have very limited access to the international trade finance markets. The EBRD financing to Araratbank will also allow for more competition among local banks and more choice for local customers.

Michael Weinstein, Head of the EBRD Resident Office in Yerevan, said the EBRD funding will allow Araratbank to significantly expand its longer term lending activities, particularly in the country’s regions. “This is a very important contribution to the growth of Armenia’s enterprise sector as at present the local banking sector does not deliver finance to micro and small enterprises on a large and sustainable basis”, he added.

Ashot Osipyan, CEO of Araratbank, stated: “We are very glad that the EBRD continues its cooperation with our bank, which is the most dynamically developing bank in the country. We are confident that the agreement will contribute to the fulfilment of our strategic plans. Araratbank holds a stable position in Armenia’s banking system and we are aiming to reach the leading position in the future.”

The Armenian Multi-Bank Framework, launched in March 2006, aims to support the increase of financial intermediation of Armenian banking system and bolster economic growth by making much needed medium-term funding available to micro and small businesses through credit lines to selected Armenian commercial banks. The EBRD works with most of the leading local banks, however this is the first project with Araratbank.