Ameriabank's latest achievements: B+ stable outlook at Fitch, $20 mln loan

PanARMENIAN.Net - Ameriabank and the German Investment and Development Corporation (Deutsche Investitions-Und Entwicklungsgesellschaft mbH - DEG) on Thursday, May 12 signed an agreement on the provision of a $20 million loan.

With a 6-year maturity period, the loan will be used to finance small and medium-sized businesses in Armenia.

Ameriabank's Director General Artak Hanesyan, DEG Financial Institutions director for Europe and Asia Rena Terfrakt and DEG Senior Investment Manager for Europe and Asia Julian Lock sealed the agreement.

“As you can see, Armenia remains attractive for foreign partners and investors,” Ameriabank’s deputy director Gevorg Tarumyan told a press conference Friday.

"Financing of SMEs is a priority for the bank. We consistently work to increase the volume of investments.”

Presenting Ameriabank’s latest achievements, Tarumyan cited the Deal of the Year – Energy Efficiency award that the bank received from the European Bank for Reconstruction and Development (EBRD).

Tarumyan said Ameriabank has issued two letters of credit for Alternative Energy LLC which were approved and financed by Commerzbank with EBRD's recommendation. Moreover, the Netherlands Development Finance Company (FMO) also participated in the deal, sharing part of the political and payment risks. The total cost of the project stood at $2,3 million, the $1,91 million of which was financed through Ameriabank's letters of credit.

Thanks to the funding, he said, the Alternative Energy LLC acquired high-quality energy-saving equipment from the Czech Republic, which enables saving energy worth $390,000 annually compared to greenhouse companies employing ordinary equipment, as well as reducing the consumption of natural gas by 1,950,000 m³.

“Due to the use of modern high-quality equipment, the company can gain a competitive advantage both in domestic and foreign markets,” Tarumyan said.

In response to a PanARMENIAN.Net question on whether loans for greenhouse farms are issued on preferential terms, Tarumyan said that the process includes 2 stages.

“In the first stage, we issue a letter of credit which boasts much more favorable conditions than the credit,” he said.

"The second stage envisages granting a loan whose conditions depend on the creditworthiness, deadlines and other factors, but we try to provide relatively reasonable conditions. In comparison, our loans are very competitive in terms of deadlines and interest rates.”

According to Tarumyan, greenhouses too are among the bank's strategic directions.

“Among other things, we’ve financed large farms for them to be able to export goods abroad,” he added.

Also among the bank’s achievements is that Fitch Ratings has revised the Outlook on Ameria's Long-term Issuer Default Rating (IDR) to Stable from Negative, while affirming the IDR at “B+.”

According to Fitch Ratings, Tarumyan said, the affirmation of the banks' IDRs, which are driven by their “B+” Viability Ratings (VRs), reflects the banks' reasonable financial metrics, albeit under moderate pressure from a challenging operating environment. The VRs also reflect Ameriabank's respectively moderate and solid loss absorption capacities, adequate liquidity buffers in light of upcoming wholesale funding maturities and strong domestic franchises.

The revision of the Outlook on the bank's ratings to Stable reflects Fitch's expectation that the bank is likely to remain resilient to pressures from the difficult operating environment. The bank also has a fairly strong ability to absorb impairment through earnings and improved capital buffer following the $30 million equity injection in December 2015.

The Bank’s “B+” IDR will raise Ameria’s awareness in the international arena, increasing the level of trust in the bank and further expanding relations with foreign investors in Armenia.