EBRD and Acba bank enhance private sector support in Armenia

The European Bank for Reconstruction and Development (EBRD) has signed a €50 million unfunded portfolio risk-sharing agreement with Acba bank to facilitate Armenian firms’ access to finance, the EBRD announced last week. 

Under the arrangement, the EBRD will cover up to 50 per cent of Acba bank’s credit risk on newly issued sub-loans. These loans will support the working capital needs of domestic businesses, helping them to expand and improve their operations. Eligible sub-borrowers will also receive EU-funded technical assistance under the EBRD’s Advice for Small Businesses programme.

Portfolio risk sharing is one of the EBRD’s core financing frameworks, dedicated to supporting and developing local private companies. The EBRD offers partner banks funded or unfunded risk participation mechanisms in foreign or local currency by co-financing and guaranteeing the partner bank’s loans to eligible companies.

This is the second transaction with Acba Bank under the EBRD’s portfolio risk-sharing framework.

The EBRD will share part of the credit risk on Acba bank’s new loans, enabling the bank to optimise capital use and significantly expand lending to Armenian businesses. Under the arrangement, Acba bank is expected to mobilise up to twice the value of the facility in financing for the private sector, amplifying its impact on economic growth.

The project will benefit from a €4.5 million guarantee provided by the EU under its European Fund for Sustainable Development Plus (EFSD+) to support the local small and medium-sized enterprise sector – a financial tool that mitigates the financial risks associated with lending to small businesses in order to promote economic growth in the country.