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Armenian Bank Plans London Market Listing


Armenia - Russian-Armenian tycoon Ruben Vardanyan speaks at the launch of the construction of an international school in Dilijan in April 2010.

Armenia - Russian-Armenian tycoon Ruben Vardanyan speaks at the launch of the construction of an international school in Dilijan in April 2010.

(Reuters) - Ameriabank, Armenia's biggest bank by assets, is making plans for a potential stock market listing in London as it pursues a domestic expansion drive after a $40 million investment by the European Bank for Reconstruction and Development (EBRD).

The EBRD is taking a 20 percent stake in Ameriabank to help to support its growth by providing funds for lending to small business, big local companies and retail customers.

"Our aspiration is an IPO (initial public offering) and to try to triple our balance sheet in the next three years," Ameriabank Chairman Andrew Mkrtchyan said, adding that it has begun negotiations with investment banks to appoint an adviser with a view to listing in the next two to three years.

The bank, whose main shareholders include Russian-Armenian philanthropist Ruben Vardanyan,did not provide an estimate of a potential valuation.

Mkrtchyan said the bank, which has total capital of $182 million and about $1 billion in total assets, is looking to further its expansion with acquisitions in its home market in the first half of the year, with the focus on profitable smaller players.

The Armenian banking sector comprises 21 lenders, serving a population of about 3.2 million people.

In addition to the EBRD investment, the World Bank's International Finance Corporation is providing a $50 million loan to help Ameriabank to boost lending to local businesses and bolster economic growth in the former Soviet republic.

Like other former Soviet states, Armenia has been hit by the economic downturn in Russia, though the International Monetary Fund said in September that it expects increased growth this year.

The IFC's Director for Europe and Central Asia, Tomasz Telma, said its loan is part of a $100 million investment program to increase stability in a sector that is critical for Armenia's broader economic development.

On December 10, another major Armenian bank, Inecobank, acquired ProCredit Bank CJSC, in what was the first market-driven consolidation in the country's banking sector.

The transaction was financed with equity investments by the EBRD and two of Inecobank's major local shareholders, supported by a $20 million loan from the IFC. The EBRD made a $20.3 million equity investment, acquiring 22.7 percent of shares in the merged group.

"The acquisition of ProCredit Bank and the capital increase will enable us to significantly enhance our services," Inecobank Chief Executive Taron Ganjalian told a news conference.

The IFC, a member of the World Bank Group, said its loan would allow Inecobank to refinance ProCredit's existing liabilities and extend its portfolio of loans to small- and medium-sized enterprises, helping it become Armenia's leader in SME lending.

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