From agricultural loans to environmental sustainability in Armenia
Promoting financial inclusion and resilience in the agricultural sector
The history of ACBA Bank and its development illustrate the important role that sustainable banks can play in emerging markets when they focus on promoting financial inclusion and resilience in rural regions and agriculture. In addition, the example of ACBA shows how much impact fixed capital can have. ACBA Bank was founded in 1996 as part of the European Union's TACIS program. Since 2007, the bank has been a portfolio company of responsAbility funds. ACBA Bank operates according to the model of a European cooperative bank.
Initially, the bank focused exclusively on granting short-term, seasonal agricultural loans. Building on its success, it then began to grant loans for non-agricultural programs in the rural regions of Armenia and, since 1999, also for small and medium-sized enterprises. Over time, ACBA Bank has expanded its offering to include a variety of universal loan products.
Strategy and implementation pay off
The strategy and its implementation have paid off: ACBA Bank has become the fourth-largest bank in Armenia and currently has a market share of over 50% in financial services for agriculture and MSMEs. ACBA Bank's loan portfolio amounts to around USD 700 million, spread across 200,000 customers with an average loan volume of around USD 3,500. This success was achieved thanks to ACBA Bank's extensive branch network, its unparalleled presence in rural regions and expertise in financing agricultural activities.
To promote ecological initiatives, ACBA has set up a subsidized financing program for drip irrigation systems in perennial plantations (fruit and wine growing, berries), vegetation and vegetable cultivation. In cooperation with the German Nature and Biodiversity Conservation Union (NABU), the bank has launched the Organic Farming Development Program to help Armenian farmers become certified organic food producers.
As part of its capacity building programs for MSMEs, ACBA offers a series of free business-specific trainings for clients (on topics such as modern financial and marketing instruments and important corporate management mechanisms). In addition, the bank introduced trade finance and export facilitation programs to help clients expand into international markets.
ACBA has proven resilient in the face of various upheavals, including the devaluation crisis of 2014 (indirectly linked to the Russian annexation of Crimea), the Armenian Velvet Revolution of 2018, the double shock of the Covid-19 crisis and the Nagorno-Karabakh war in 2020, and now the war in Ukraine. In all cases the bank managed to maintain adequate capitalization and liquidity while maintaining its core mission of providing agricultural and MSME loans. The latest external bank stress test showed that ACBA continues to perform well, has a good liquidity profile and has sufficient capital to successfully weather periods of unfavorable market conditions.
Resilience and liquidity support the granting of SME and agricultural loans
Specific training programs
"ACBA offers a variety of free business-specific training courses as part of its capacity building programs for MSMEs. These include modern financial and marketing tools as well as key business management mechanisms."
ACBA CEO, 2022
