The project’s sponsor is Inecobank which accounts for 4.5% of assets in the Armenian banking sector. The Bank’s core business areas include retail and SME lending and money transfer services. The shareholder’s structure is as follows: three main individual Armenian businessmen who hold 37.14% for Mr. Baloyan, 33.23% for Mr. Safaryan, and 3.71% for Mr. Grigoryan. International financial institutions including DEG and IFC own 13.50% and 10.00% respectively of the Bank and other individuals own 1.21% each.

The proposed IFC investment consists of a senior loan of up to $3 million and a GTFP trade guarantee facility of up to $2 million.

3.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	3.0
Equity

* These investment figures are indicative

Inecobank is headquartered in Yerevan, Armenia. The Bank has currently 5 branches and is planning to open additional outlets in Yerevan and the regions.

The expected development impact of this project is high because it achieves the following objectives in an IDA country:

- enabling the Bank to expand its lending operations and provide commercial financing to businesses in a variety of sectors, therefore fostering economic growth and employment generation;
- helping to develop the residential mortgage standards according to international norms and best practices in Armenia; and
-contributing to building a commercially viable banking system in Armenia.

IFC’s involvement will improve the Bank’s funding profile and increase the Bank’s visibility with potential investors, thereby enabling it to further develop and expand its loan products, particularly in the areas of SME and mortgage lending. Furthermore, IFC’s involvement will support important corporate initiatives (e.g., in the areas of governance and risk management) which will result in strengthened operational profile.

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

As an existing IFC client, Inecobank has established a Social & Environmental Management System (SEMS) to screen investments against the IFC FI Exclusion List and applicable Armenian social and environmental laws and appointed an SEMS Officer. These applicable performance requirements will continue to apply.

For this investment the Bank will be required to:

- Upgrade its existing SEMS prior to disbursement to the satisfaction of IFC;
- Continue to ensure that responsible, qualified persons are appointed 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;
- Continue to submit a periodic report to IFC as per a format to be provided by IFC.

The mortgage and consumer finance components will not attract any S&E requirements.