2008 – present
Supported with funds from the Austrian Development Agency GmbH and
the Government of the
Netherlands
The IFC Armenia Banking Market Development Project
aims to improve the business enabling environment for financial institutions and
provide in-depth consulting to selected financial institutions in Armenia. The
project focuses on two main areas: mortgage lending related regulation and
infrastructure and improvements in risk management practices, including transfer
of distressed assets.
The Challenge
Armenia is a small
frontier economy with about 26 percent of population living below the poverty
rate. The economic crisis resulted a decline in GDP and rising poverty levels,
which have been especially pronounced in the country’s regions.
The
country's banking sector faces many challenges:
- For many unemployed people, opening a small business can be the only source
of income and access to microfinance is critical. However, during the global
financial crisis, most local financial institutions focused on their existing
portfolio rather than expanding lending.
- There are legislative gaps in the areas of insolvency, bankruptcy, and
distressed assets transfer.
- There is significant demand for housing finance and risk management advice.
- There is a need for financial institutions to improve capacity in managing
distressed assets, portfolio monitoring, and other associated areas of risk
management which have been weakened as a result of the crisis.
- A sustainable housing finance system would increase access to affordable
housing for people with low and medium income. The mortgage industry is still
very young in Armenia and there is a need to support its development through
legal and regulatory modernization and product standardization.
IFC Approach
- Facilitate improvements in the existing legal and regulatory framework of
insolvency and distressed asset management.
- Provide in-depth consulting to selected financial institutions via tailored
advisory based on initial diagnostics and aimed at risk management and loan
portfolio resolution strategies and practices.
- Facilitate improvements in the housing finance legal and regulatory
environment.
- Facilitate mortgage market standardization and adoption of best practices
inter alia by working with the Central Bank and lenders including IFC clients
and a mortgage liquidity facility (National Mortgage Company).
- Conduct public outreach activities including seminars, conferences,
workshops related to loan resolution strategies and risk management.
For more information please contact: Vardan Gevorgyan, Project Manager,
vgevorgyan@ifc.org
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