ProCredit Bank Armenia

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Senior loan and equity participation in a greenfield specialised microfinance bank in Armenia with ProCredit Holding and KfW. PCB Armenia plans to open its doors in September 2007. The proposed project will support the development of private micro and small enterprises (‘MSEs’) in Armenia by providing financial services on a sustainable basis particularly in the regions outside of the capital. The project is expected to have high transition impact by contributing to the development of the MSE sector in Armenia and further demonstrating the viability of the MSE lending operations to other local banks. The MSME sector comprises trade, construction and services; 34 percent of Armenia’s labour force is employed in the MSME sector. PCB Armenia will help to satisfy the significant unmet demand for MSE finance. It will set new standards in good corporate governance, promote competition in the microfinance sector and foster innovation and better standards in customer service and conduct of business which will have a positive effect on other market participants and result in better services to the final beneficiaries. Once established, PCB Armenia will seek to become a universal commercial bank providing wide range of products to its target clients. It will strive to become an accessible bank with a strong focus on MSE lending, including in the regions outside of the capital. A key priority will be the development of deposit taking as well as capturing remittances. A founding equity investment of up to AMD 1.2 billion (USD 3.2 million equivalent ) (representing up to 20% of total equity). A senior loan of USD 7 million with maturity of up to five years for on-lending to MSEs. USD 31 million. PCB Armenia will need to nominate a senior member of the management responsible for environmental issues, introduce EBRD Environmental Procedures for Local Banks into its credit appraisal procedures, implement them and train its credit officers on environmental and social risk management. The bank and all of its activities and operations shall also comply with Armenian national environmental, health, safety and labour regulations and standards as well as with the Core Conventions of the International Labour Organisation related to child and forced labour and discrimination at work. PCB Armenia shall submit to EBRD Annual Environmental Report in a format and contents satisfactory to the bank. Technical co-operation funds are sought to contribute to the bank’s institution building, including the training of local bank staff, and to support the acceleration of its regional expansion through the building up of an extensive network of branches and lending outlets as well as introducing mobile banking. N/A