The global economy is fragile, vulnerable, which affects Europe and Central Asia, where the environment is extremely difficult. Many countries in the region, including Armenia, are still adapting to the new economic reality, and their financial sectors are exposed to a number of different challenges. Armenpress's questions about the mechanisms for overcoming challenges were answered by the International Finance Corporation (IFC) in the Europe and Central Asia region. ) director Tomas Telman.
What are IFC's main interests in Armenia's financial sector?
A member of the World Bank Group, the International Finance Corporation (IFC), the world's largest development organization, focuses on private sector investment in developing countries and, through advisory services, aims to help the private sector create new jobs and new opportunities where they are needed most.
A stable financial sector is essential for broad-based economic growth. In these difficult times for the region, our goal is to increase the support provided to Armenian banks and increase confidence in the country's banking sector.
Within the framework of this strategy, we committed to provide a subordinated loan of USD 50 million to Ameriabank CJSC, the largest bank in Armenia, in order to increase its capital and increase the lending capacity of the country's enterprises, expanding access to financing and stimulating economic growth and job creation.
How does IFC assess the overall performance of Armenia's banking sector, especially in comparison to other countries in the region?
The global economy is fragile/vulnerable, which affects Europe and Central Asia, where the environment is extremely difficult. Many countries in the region, including Armenia, are still adjusting to the new economic reality, and their financial sectors face a number of different challenges.
Providing capital to Ameriabank is part of our strategy to help increase the stability of Armenia's banking sector. Larger and stronger banks that grow through organic growth or consolidation are the backbone of an efficient banking industry. We believe that Armenia's private sector has great potential, and we are ready to support local banks so that they can increase lending to private enterprises and stimulate growth.
What financial instruments has IFC used to diversify and develop Armenia's financial sector?
In addition to investments that help raise capital and help increase lending to local businesses, we also provide advisory services. They help our clients improve risk and corporate governance practices and implement innovative solutions for their SME clients. IFC's Global Trade Finance Program also helps our client banks finance many important projects in Armenia.
In 2013, we issued IFC's inaugural AMD bond. It became the first placement of a non-resident issuer in Armenia and the first foreign corporate bond issued on the Armenian capital market.
Why did IFC choose Ameriabank as a subordinated loan partner?
Since 2009, the bank has been a valued partner of IFC in many areas, including trade finance and small hydropower lending programs aimed at increasing the country's supply of renewable energy. in 2013 Ameriabank was also the underwriter of the IFC bond, which became the largest corporate bond in circulation in Armenia in 2014.
We look forward to continuing to work together to help the bank achieve its strategic goals and prepare for an initial public offering (IPO). A well-developed banking sector is very important for the development of any economy, so the growth of Ameriabank, the largest bank in the country, is important for the overall stability of the sector.
How does the transaction with Ameriabank contribute to the implementation of IFC's medium-term plans for its presence in Armenia and the region?
Ameriabank is one of our main partner banks here. As I already mentioned, our assistance to the bank is aimed at increasing the stability of the banking sector in Armenia. It is also part of a wider regional strategy to support strong banks that provide vital financial services to local businesses, particularly SMEs, which are the main drivers of job creation in developing countries. For example, in 2014 IFC's client banks in the countries of Eastern Europe and Central Asia provided more than 5.7 million current loans to micro, small and medium enterprises, amounting to 81 billion. with a total amount of USD.
Will subprime credit, as a new form of financial transaction for Armenia's financial sector, affect the general sector?
By providing capital to one of our key partner banks in Armenia, we are contributing to its growth strategy and the implementation of future projects that we believe will contribute to the overall stability of the banking sector in Armenia.