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YEREVAN. – The acquisition of ProCredit Bank Armenia by Inecobank will increase the impact on the financial market of Armenia, Avtandil Gogoli, the CEO of ProCredit Bank, told the media Thursday in capital city Yerevan.

On the same day, Inecobank has announced buying 100 percent of the shares of ProCredit Bank Armenia. To complete the deal, Inecobank attracted funds from the International Finance Corporation, which extended a loan of $20 million, and the European Bank for Reconstruction and Development, which made an equity investment of AMD 9.8 billion (around $20.2 million, at present exchange rate), becoming a stockholder of 22.7 percent.

The bank has been present in Armenia for seven years, and it’s fair to say that it built up one of the best corporate government practices in Armenia as well as a solid SME portfolio.

“However, we’ve not reached a critical presence in the market, and given the size and leverage abilities of Inecobank, we think that the impact from the merger would be much higher,” Gogoli added.

The question on why Germany-based ProCredit Holding AG chose not to increase the capital of its Armenian subsidiary bank and keep it seated in the market, Gogoli answered: “You are right; this would be no large amount for the group. The point is ProCredit wants to make an impact wherever it operates. This implies a certain size of the market. Given that fact, we decided to focus on other markets.”

To remind, in December 2014, the Central Bank of Armenia multiplied the minimum capital requirement for commercial banks from AMD 5 billion to AMD 30 billion (around $60 million), effective 2017. This gave momentum to negotiations on M&A deals between larger and smaller banks.

In the third quarter of 2015, ProCredit Armenia’s capital totaled around AMD 9.2 billion.

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