OREANDA-NEWS. October 12, 2010. The European Fund for Southeast Europe (EFSE) has provided its first loan of USD 5 million to ARARATBANK (or “the Bank”), a privately-owned Armenian Bank set up in 1991, reported the press-centre of ARARATBANK.

The loan is available to the Bank for on-lending to micro, small and medium-sized enterprises (MSMEs) especially in remote and rural areas in Armenia, thereby addressing a major constraint to economic growth. Despite the positive economic development in recent years, Armenia’s economic potential is limited by the lack of long-term credit available to MSMEs.

This is EFSE’s second investment in Armenia since it started operations in the country in December 2009. The loan is provided under the Fund’s European Eastern Neighbourhood Fund window which is dedicated to the European Eastern Neighbourhood Region of the European Union, including the countries of Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.

ARARATBANK is a medium-sized bank which has gained a strong expertise in MSME lending due to its continued efforts in small and medium business development, introduction and application of contemporary banking technologies, and its skilled and proficient staff. By participating in a number of lending programs implemented by international financial institutions and the Armenian government, including World Bank’s “SME Access to Finance”, Lending Programs of European Bank for Reconstruction and Development, German KfW’s "Stable development of mortgage market" program, “Economy Stabilization Lending” of the Armenian government, and credit programmes of the Swiss Izmirlian Foundation, ARARATBANK was able to provide an increase in its credit portfolio due to these additional resources. Particularly, the balance of loans extended to small businesses exceeded the previous year’s figure by 127%, while the balance of loans provided to medium businesses surpassed last year’s figure by 51%. With 31 branches, the Bank has an extensive regional network to serve the micro, small and medium-sized businesses.

“This recent investment in Armenia demonstrates EFSE’s strong commitment to the country and our region of operation”, said Dr. Klaus Glaubitt, Chairman of the EFSE Board of Directors. “Having ARARATBANK as a new, strong partner, the Fund will further expand its outreach and will enable the Bank to provide access to over 300 micro and small businesses in the Region.”

As mentioned by the Chairman of the Executive Board of ARARATBANK, Mr. Ashot Osipyan, the cooperation with EFSE is considered by ARARATBANK as supporting of new development in the sector of lending to micro, small and medium-sized enterprises. Mr. Osipyan said: “We are honoured to have a new partner with significant experience of cooperation with banking and financial institutions within Europe and former Soviet Union countries. We welcome any new project which can support the development of the banking system, provide experience and meet the interests of our customers. I am assured that the cooperation with EFSE will be prosperous and permanent.”