Financed ProjectsInecobank, SME 3

Identification Code:

OP/15/0017

Total Operation Cost:

5.000.000

Maturity:

36 months

Operation Status:

Description and Purpose of the Operation:

Inecobank, SME 3

Countries of Operation:

Armenia (100,00 %)

Financial Product:

SME's

Sector:

Financial Institutions

Domain:

Private

Borrower/Client:

SME-3 Loan Facility to CJSC Inecobank

Co-Financiers/Participants:

N/A

Guarantors/Sponsors:

N/A

Developmental and Regional Cooperation Impact:

The operation involves a loan for on-lending to small and medium sized enterprises (SMEs) that is expected to have modest but favorable economic benefits for the Armenian economy. The most relevant of these is the additional tax revenue gains from increased economic activity resulting from the financing provided. In addition, the financing will help further enhance benefits such as increases in employment, increase in export capacity and competitiveness, and multiplier effects for other parts of the economy. The regional cooperation element is similarly expected to be modest. Other BSTDB countries are important trade partners for Armenia so to the extent SMEs benefiting from financing from the operation engage in export activities, there will be regional cooperation benefits.

Environmental Classification and Impact (summary):

Inecobank is an existing client of the Bank and the accumulated experience in terms of Environmental and Social (E&S) risk management associated with SME financing has been positive. The Borrower has developed and implemented a functioning E&S risk management system, which generally meets the requirements of BSTDB towards FIs and provides a comfortable degree of insurance that i) the SMEs financed from the Bank's proceeds comply with the E&S Exclusion List and the legal and regulatory requirements in effect in the Republic of Armenia; and ii) the sub-loans with potentially high E&S risk and impact are assessed and the necessary mitigation measures identified and translated as covenants in SME credit agreements. The 2014 portfolio was represented mostly by trade – 36% and consumer loans -35% which are low E&S risk category, followed by food production -6%, construction -5% and energy sector -3%. The E&S assessment of sub-loans was based on accepted guidelines and checklists for risk category evaluation and compliance.

Operation Leader:

Financial Institutions I

E-mail:

fi1@bstdb.org