Economics

IFC and IAB International Academy of Business help strengthen Armenia’s bank sector

IFC, a member of the World Bank Group, is partnering with IAB International Academy of Business to help Armenian banks strengthen risk management systems, so that they continue providing much-needed finance to businesses, amid the challenges in operating environment.

IFC’s advisory team and IAB International Academy of Business are launching a series of workshops for banks on risk management and non-performing loans (NPLs) over the next 12 months, part of efforts to reinforce the stability of the financial institutions and prevent further NPLs.

The initiative also aims to help financial institutions introduce innovative solutions for small and medium enterprises (SMEs), helping the banks expand this line of business and increase lending to smaller businesses. Access to finance was identified as the main challenge for SMEs by the World Economic Forum’s Global Competitiveness Report 2015-2016.

“Given increased volatility, it can no longer be assumed that financial institutions will continue operating as they used to in the past. Additional measures are required to help develop the foundation of the financial sector and support its growth,” said Araksya Martirossian, CEO of IAB International Academy of Business. “This is an exciting initiative for the development of Armenia’s economy and we are delighted to be partnering with IFC for its delivery.”

“In challenging economic times, financial institutions tend to tighten their lending and focus on mid-size and large businesses. This results in credit becoming less accessible to SMEs,” said Jan van Bilsen, IFC Regional Manager for the South Caucasus. “This initiative aims to help Armenian banks strengthen their risk management practices and continue financing small businesses, a key engine of economic growth.”
The efforts also aim to help Armenian financial institutions understand their capital adequacy models, especially important in light of increased minimum capital regulatory requirements. It is part of the IFC Strengthening Financial Systems in Europe and Central Asia project, funded by the Swiss State Secretariat for Economic Affairs (SECO).

Armenia became an IFC member in 1995. Since then, IFC’s long-term investment commitments have totaled $340 million, including nearly $23 million mobilized from other lenders, financing 47 projects across a range of sectors. IFC has also supported trade transactions worth around $130 million through its trade finance program, and implemented a number of advisory projects focused on private sector development.

In fiscal year 2015, IFC invested almost $18 billion in developing countries worldwide.

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