Established in early 2003, Ardshininvestbank is the successor of Ardshinbank, having acquired a significant part of Ardshinbank’s assets and liabilities including its regional franchise with 24 branches throughout Armenia. In November 2003 ASHIB also acquired a considerable part of business of Armagrobank, with its infrastructure and 35 branches. Following rationalization, currently, the bank’s regional franchise consists of 50 branches, a representative office in Paris, and about 1000 employees in Armenia. At the end of June 2007, the bank had a market share of 13% of banking assets and 14% of loans of the banking sector. Today the bank focuses on serving corporate clients, SMEs and retail clients.

The bank is majority-controlled by Mr. Safaryan, a prominent Armenian businessman with interests in Armenia and Russia. Mr Safaryan and his family members either currently directly or indirectly own or control 90% of the bank.

The total project cost would be up to $25 million and would consist of a debt and equity package, including a loan for IFC’s own account of up to $15 million.

25.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.0
Equity	10.0

* These investment figures are indicative

Ardshininvestbank is headquartered in Yerevan and has 50 branches across Armenia, and a representative office in Paris.

The potential developmental and institutional impact of the project is high. The underdeveloped banking sector impedes Armenia’s economic growth and limits local business access to longer term financing. Current lending environment favors businesses with short-term trade finance needs and companies that can provide substantial collateral coverage in the form of real estate, precious metals, and other highly liquid assets.

The development impact of the project is expected to be significant in terms of its support for local businesses in real economy. By providing financing to ASHIB, IFC will enable the bank to expand its lending operations and provide longer tenor commercial financing to businesses in a various economic sectors, therefore fostering economic growth and employment generation. In addition, this project will broaden access of the population to the mortgage market thus improving the living standards of population.

IFC’s role in this project is to assist ASHIB in sourcing commercial finance. In addition, IFC will help the bank to expand its financing to corporate clients including SMEs and grow its retail lending, in particular, residential mortgages.

IFC''s proposed investment will help support the strategic objectives and growth prospects of a leading Armenian banking institution. It will help the bank improve its governance and operational standards, assist ASHIB in developing access to term finance on commercial terms without a government guarantee, and help one of largest banks in Armenia to expand its financing to SMEs and individual borrowers by strengthening the Bank’s capital and providing long-term debt.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

During appraisal, IFC will analyze ASHIB’s portfolio and the activities proposed to be supported with IFC financing for types of transactions, size, tenor and industry sectors and determine the Applicable Performance Requirements, if any, that would include a combination of:

- The IFC FI Exclusion List and/or
- The applicable National Social and Environmental Laws and regulations and/or
- The IFC Performance Standards

IFC will also review, if required, the capacity of ASHIB to manage social and environmental risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS. Based on the review, ASHIB will be required to:

- Develop an, or upgrade, if necessary, any existing SEMS, prior to disbursement to the satisfaction of IFC
- Identify responsible, qualified persons to manage and implement the SEMS
- Commit to implement the SEMS, to ensure that its investments/activities supported by IFC financing are in compliance with the Applicable Performance Requirements
- Submit a periodic report to IFC as per a format to be provided by IFC