INTERVIEW: On the road with Armenia's Ardinshininvestbank

By bne IntelliNews November 3, 2008

Clare Nuttall in Almaty -

Ardshininvestbank has emerged as one of the largest players in Armenia's small, but highly competitive, banking market. To keep up the momentum, the bank is exploring many options to raise funds on international and domestic markets.

When I caught up with deputy chairman Evgeny Spravtsev at the BTA Interbanking conference in Almaty at the end of September, he explained that the bank had passed two highly significant milestones in the last year. First, in December 2007, the International Financial Corporation (IFC) took a 10% stake in the bank, also providing a $15m credit line for small business and mortgage funding. In July, Moody's Investors Service assigned its first credit rating to Ardshininvest. At 'Ba3/Ba1/NP/D-', Ardshininvest has the highest rating it could hope to gain given Armenia's country ceiling.

These developments, Spravtsev says, are the bricks on which the bank's future will be built. "With the IFC's investment and our Moody's rating, we can go to international financial markets to borrow money. They make us more understandable for our peers, and show that we're as transparent as any CIS bank could be."

The bank is preparing for an AMD1.5bln (around $5m) domestic bond issue at the end of November. "This is our debut issue. It's a small amount by international standards, but for Armenia it's quite big - almost four times largest than the latest issue. Our main objective is to establish a credit history so we can borrow more in future," says Spratsev. It also has two deals in the pipeline with international investors, to be closed by the end of this year.

Hard job

The lobby of the Intercontinental Hotel in Almaty seems an appropriate place to mull over the pros and cons of raising money on international capital markets, given Kazakhstan's recent financial history. Comparing Armenia to Kazakhstan, Spravtsev explains that, "The Armenian financial sector is less involved with international financial markets. This was a disadvantage, but at this stage it's to our advantage because we are not so harassed by the financial crisis." However, the gloom that international capital markets have been plunged into means that despite eight years of double-digit GDP growth in their country, for Ardshininvestbank and other Armenian banks, it's "not as easy to raise capital as we thought."

A large part of Spravtsev's role involves raising money and arranging trade finance. He was invited to join Ardshininvestbank in order to bring his experience of the Russian market - working at Home Credit and Finance Bank - to Armenia. The bank's owners had already spotted that Armenia's banking sector was progressing in a similar way to Russia's, but was several years behind in terms of development.

Evgeny Spravtsev

He is particularly proud of the IFC deal - "the largest deal with an institutional investor in recent Armenian history," he points out. As well as working on the bond issue and raising finance from international investors, he is also working on partnerships with international institutions and arranging trade finance, opening as many lines for the bank as possible. Most recently, the bank announced a trade finance deal with ČSOB (Ceskoslovenská Obchodná Banka) - the very first trade finance deal between Czech/Slovak and Armenian banks.

Given the highly competitive landscape of the Armenian banking sector, investment is necessary to maintain Ardshininvestbank's position as one of the country's top three banks. "There are 22 banks in Armenia - that's not many for some countries, but for Armenia it's too many. We expect to see a process of consolidation, and more new entrants to the market," Spravtsev says.

Around 50% of Armenia's banking sector is already in foreign hands, and this figure is likely to increase. The Armenian banking sector is extremely well regulated, according to a report released earlier this year by ratings agency RusRating, which has further increased its attractiveness to potential investors.

Ardshininvestbank's majority owner, with 86.8% of the stock, is Region-IFC - a diversified holding company owned by businessman Karen Safaryan. It was formed in 2003 and later in that year acquired a significant part of the assets and liabilities of two Armenian banks - Ardshinbank and Armagrobank.

It is active across both corporate and private banking, with more than 12,000 business clients and 52,000 private clients. "We think of ourselves as a universal bank. There is no one sector that we would like to develop more than others," Spravtsev says.

Today, the bank is Armenia's largest in terms of authorized capital, loans, net profit and term deposits. It is also a big player in the international transfer market, which is highly important to the Armenian economy - remittances from Russia amounted to $554m in the first quarter of 2008 alone. "There is a huge cash flow into the country from Armenians working abroad," explains Spravtsev. "For many families this is their only source of income. We work with all the major providers - both international firms like MoneyGram, and CIS-based firms such as Unistream and FastPost."

Much of the Armenian economy is still cash-based, meaning that Ardshininvestbank and its peers have an uphill struggle persuading their clients to adopt new banking products.. "What I say to everyone here is 'be patient, you can't do it all in a day'," Spravtsev says. "Good communication is very important."

Highlighting its arrival as one of Armenia's largest banks, Ardshinivestbank moved to new headquarters in central Yerevan in April this year. After three years of renovation work, the opening of the new offices, designed by prominent Armenian architect Sargis Gyurzadyan, was celebrated with a lavish housewarming attended by the then president, Robert Kocharyan, and the president-elect, Serge Sargsyan. It was the chairman of Ardshininvestbank's management board who summed up the significance of the occasion, describing his ambition "to bring to life an idea of a pan-Armenian, big and powerful bank."

Send comments to The Editor

INTERVIEW: On the road with Armenia's Ardinshininvestbank

Related Articles

COMMMENT: Great challenges for Eurasia call for decisive solutions

Juha Kähkönen of the IMF - The Caucasus and Central Asia (CCA) region continues to navigate a wave of external shocks – the slump in global prices of oil and other key commodities, the slowdown ... more

IMF calls for Central Asia to tighten monetary policy

Naubet Bisenov in Almaty -   Caucasus and Central Asian (CCA) countries need to tighten their monetary policy to anchor inflation expectations, but excess tightening may weaken financial ... more

COMMENT: Once I lived the life of a millionaire…

Peter Szopo of Erste Asset Management -   No, the title of this column is not the first line of the autobiography of an erstwhile emerging markets investor – although it could be. Somebody who ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.