YEREVAN, FEBRUARY 5, ARMENPRESS. The global economy is fragile and this impacts Europe and Central Asia, where the environment is extremely challenging. Many countries in the region, including Armenia, are still adjusting to this new economic reality, and their financial sectors are being challenged on a number of different fronts, Tomasz Telma, IFC Director for Europe and Central Asia answered to “Armenpress” questions referring to the mechanisms on overcoming the challenges.

What are IFC’s main interests in the financial sector of Armenia?

“As a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets, IFC, through both its investments and advisory services, aims to help the private sector create jobs and new opportunities where they are needed most.

A stable financial sector is critical for broad-based economic growth. In these challenging times in the region, our aim is to increase our support to Armenian banks and boost confidence in the country’s banking sector.

As part of this strategy, we have committed a $50 million subordinated loan to Ameriabank, the largest bank in Armenia, to support its capital and increase its capacity to lend to local enterprises, thus expanding access to finance and helping to drive economic growth and job creation. “

How would IFC assess the overall efficiency of the Armenian banking sector, especially as compared to peer countries in the region?

“The global economy is fragile and this impacts Europe and Central Asia, where the environment is extremely challenging. Many countries in the region, including Armenia, are still adjusting to this new economic reality, and their financial sectors are being challenged on a number of different fronts. 

Our capital support to Ameriabank is part of our strategy to help increase the stability of Armenia’s banking sector. Larger and stronger banks, either through organic growth or consolidation, are a basis of an efficient banking sector. We believe the private sector in Armenia has strong potential, and we stand ready to consider financing for local banks, so they can increase lending to private companies and support growth.”

What kind of financial instruments has IFC used to diversify and develop the financial sector in Armenia?

“In addition to investments that provide capital support and help increase lending to local enterprises, we also provide advisory services. These help our clients improve risk management and corporate governance practices, and introduce 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 Armenian dram bond. It was the first placement by a non-resident issuer and the first foreign corporate bond issued in Armenia’s capital markets.”

Why has IFC chosen Ameriabank as its partner for subordinate debt?

“Since 2009, the bank has been a valued IFC partner in many areas, including a trade finance program and lending to small hydropower plants to increase the country’s renewable energy supply. In 2013, Ameriabank was also an underwriter of IFC’s bond, which became the largest corporate bond traded 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 critical for economic development, so the growth of Ameriabank, which is the country’s largest bank, is an important contributor to the sector’s overall stability.”

How does the deal with Ameriabank contribute to IFC’s mid-term plans of its presence in Armenia and the region?

“Ameriabank is one of our key partner banks here. Our aim in supporting the bank, as I outlined earlier, is to increase the stability of Armenia’s banking sector. It is also part of a wider regional strategy to support strong banks that provide vital financial services to local businesses, particularly SMEs, the primary engine for job creation in developing countries. For example, in 2014, IFC client banks in Eastern Europe and Central Asia provided more than 5.7 million outstanding loans to micro, small, and medium enterprises, totaling $81 billion.”

Will the subordinate debt, as a new form of financial deal for the Armenian financial sector, impact the overall sector?

“By providing capital support to one of our key partner banks in Armenia, we endorse its growth strategy and future plans, which we believe will help increase the overall stability of Armenia’s banking sector.”