Early Warning System

Regions

Europe and Central Asia

Geographic location where the impacts of the investment may be experienced.

Countries

Armenia

Geographic location where the impacts of the investment may be experienced.

Financial Institutions

Netherlands Development Finance Company (FMO)

International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.

Project Status

Approved

Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.

Bank Risk Rating

Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."

Voting Date

Apr 30, 2024

Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.

Borrower

Ardshinbank CJSC

A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.

Sectors

Finance
Industry and Trade

The service or industry focus of the investment. A project can have several sectors.

Investment Type(s)

Guarantee

The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.

Investment Amount (USD)

$ 18.63 million

Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Currency conversion note:
Bank reported 7227.96
Converted using 2024-04-30 exchange rate.

Project Cost (USD)

$ 18.63 million

Bank Documents

Disclosure translation in Russian

Primary Source

Original disclosure @ FMO website

Updated in EWS Jun 19, 2024

Disclosed by Bank Oct 13, 2023

Contribute Information
Can you contribute information about this project?
Contact the EWS Team

Project Description

If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

According to the FMO, 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 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.

Early Warning System Project Analysis

For a project with severe or irreversible impacts to local community and natural resources, the Early Warning System Team may conduct a thorough analysis regarding its potential impacts to human and environmental rights.

As stated by the FMO, 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.

Investment Description

Here you can find a list of individual development financial institutions that finance the project.

Netherlands Development Finance Company (FMO)

Financial Intermediary

A financial intermediary is a bank or financial institution that receives funds from a development bank. A financial intermediary then lends these funds to their clients (private actors) in the form of loans, bonds, guarantees and equity shares. Financial intermediaries include insurance, pension and equity funds. The direct financial relationship is between the development bank and the financial intermediary.

Ardshinbank CJSC (Financial Intermediary)

Private Actors Description

A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

As stated by the FMO, Ardshinbank CJSC 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.

Contact Information

This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

Financial Intermediary - Ardshinbank CJSCJ:

Website: https://www.ardshinbank.am/en/

ACCESS TO INFORMATION

As part of FMO's ex-ante disclosure (disclosure of transactions before contracting), you can send requests or questions for additional information to: disclosure@fmo.nl

ACCOUNTABILITY MECHANISM OF FMO

Communities who believe they will be negatively affected by a project funded by the Dutch Development Bank (FMO) may be able to file a complaint with the Independent Complaints Mechanism, which is the joint independent accountability mechanism of the Dutch Development Bank (FMO) and the German Investment Corporation (KfW). A complaint can be filed in writing, by email, post, or online. The complaint can be filed in English or any other language of the complainant. The Independent Complaints Mechanism is comprised of a three-member Independent Expert Panel and it can provide either problem-solving, compliance review or both, in either order. Additional information about this accountability mechanism, including a guide and template for filing a complaint, can be found at: https://www.fmo.nl/independent-complaints-mechanism