The Asian Development Bank (ADB) has made its first equity investment in Armenia, buying a 13.97% stake in the country’s largest bank, Ameriabank. 

Access to finance for small and medium-sized enterprises (SMEs) and micro-entrepreneurs is limited in Armenia, according to a statement from Ameriabank, and the ADB’s investment is expected to help expand services and lending, especially to the SME sector. 

The Ameriabank deal makes the ADB the bank’s second-largest institutional investor after the European Bank for Reconstruction and Development (EBRD), the ADB said on June 8. In addition to the equity investment, equivalent to $30mn, the ADB has also approved a loan of up to $30mn to Ameriabank. 

“This is ADB’s first equity investment in Armenia and reflects its belief in the quality of Ameriabank’s management and in the development potential of the country’s entrepreneurial SME sector,” the bank said in a statement.

“In partnership with Ameriabank’s dynamic team, we will help provide more credit to small and medium-sized enterprises so they can help contribute to the growth and development of Armenia,” ADB country director Shane Rosental said in a statement.

“Penetration of banking services in the Armenian economy is low relative to its size and to comparable markets,” commented Andrew Mkrtchyan, chairman of the board of directors at Ameriabank. 

Banking penetration remains relatively low in Armenia; a recent report by the World Bank showed that under 50% of the population has a bank account, although even this figure represents a dramatic increase in recent years. 

In addition, while SMEs account for the vast majority of enterprises in the country they contribute a disproportionately low amount to GDP (43%) and employment (41.7%), according to Ameriabank’s statement.