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EBRD takes first equity stake in locally owned Armenian bank
The European Bank for Reconstruction and Development is acquiring a 25 per
cent (plus one share) stake in Armenian Economy Development Bank (AEB, or
Armeconombank). AEB is already Armenia’s fifth largest bank by assets in a
sector encompassing 19 privately owned banks, and the investment is expected
to assist the bank to become a stronger, better capitalised, financial
institution.
This is the Bank’s first equity participation in a locally owned Armenian
bank. Undertaken against a background of strong improvement in the Armenian
economy (which grew 13.9 per cent in 2003, the highest of any CIS country), it
cements a relationship fostered since 2000 between the Bank, AEB and AEB’s
majority shareholders, the Sukiasyan family. The Sukiasyans bought AEB in 1997
and returned it to profitability from 2000 onwards. After the upcoming
subscription is completed, the Bank and the Sukiasyans will jointly hold more
than 75 per cent of AEB’s shares.
The investment of AMD 583,337,500 (€887,000 equivalent) will be supported by a
€500,000 technical assistance package provided by the European Union for
institution building in key operational areas. In addition, the Bank will gain
a seat on AEB’s Supervisory Board.
The Central Bank of Armenia has been working to strengthen the country’s
banking sector, raising minimum capital requirements from $2 million today to
$5 million by 1 July 2005. AEB is seen as well placed to prosper in an
increasingly competitive environment. It has already taken a lead in bringing
products that are standard in more developed markets but new in Armenia to the
local market. It has captured significant market in local plastic bank cards,
and is a leader in a fledgling mortgage market.
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