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Integrated Risk Management for Increased Financing of the Agriculture Value Chain. Brief Presentation of Armenia. Armenia is composed of 10 regions («marzes»). Its capital is Yerevan. Population:

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Brief Presentation of Armenia

      • Armenia is composed of 10 regions («marzes»). Its capital is Yerevan.
  • Population:
      • Around 3.2M inhabitants living in Armenia, diaspora equals to 8M inhabitants who live mainly in the territory of Ex-USSR, France or United States of America.
      • Around 65% of inhabitants live in urban areas, 65% out of the mentiond live in Yerevan.

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An extraordinary example of franco-armenian cooperation realized

by Credit Agricole on the european financing

A unique event in the former USSR.

Agricultural Cooperative Bank of Armenia (ACBA) was the first cooperative bank in the former USSR. The bank started its activity in may of 1996.

Together towards prosperity


Institutional History

1. After fall of USSR, Armenian agricultural land privatized in 1991.

2.Agricultural credit at the time was very expensive and difficult to obtain.

3.Establishment of ACBA where the technical assistance of Credit Agricole Consultants played an important role and which was financed by the EU TACIS Program.

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Bank’s structure - three level, created by the model of European Banks.

First level –

Mutual Village Associations (MVAs)


Second level - Agricultural Cooperative Regional Unions (ACRUs)



Third level - Bank


Development of the Bank

Gradual enlargement of the geography of the Bank’s functioning:

all 10 regions of

Armenia from 2004

3 regions

in 1996

60 MVAs

in 1996

735 MVAs

in 2009

4028 MVA members

in 1996

50 000 MVA members

in 2009

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Acquisition of the Bank

The Bank has had a stable rythm of development.

Keeping its priority in the domain of agricultural loans, the Bank has progressively turned into a universal banking organisation.

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Cooperation with International Partners

  • The Bank cooperates with a number of international organizations such as:
    • IFAD
    • EBRD
    • KfW
    • GAF
    • BSTD
    • etc.

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Together towards prosperity

The Role of Credit Agricole:

examplary partnership

Efficient cooperation of years with the Group Credit Agricole entered another phase and obtained more important character.

Credit Agricole became the shareholder of ACBA Bank. The Bank ’s activity is destined to extension of experience and implementation of new technologies and services.


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Creation Of ACBA Leasing

Technical assistance to the bank realised by the consultants of Credit Agricole.

Creation of first society of leasing in Armenia, ACBA Leasing (2003) by ACBA Bank, Credit Agricole Leasing and IFC.

Significant role of USAID in the technical assistance to the newly created company.


Risk Management

Risk management ensures the financial stability of Bank and the secure growth of Bank activities. It includes :

  • Credit policy, which is based on the gradual increase of the amount and terms of clients’ liabilities and on the credit history of the borrowers.
  • Using of various methods for risk analysis, the method is chosen depending on the amount of the loan and the borrowers’ credit history.
  • Permanent control on the disbursed loans by the loan specialists.

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The Role of MVA in Risk Management

  • Assess the professionalism and individual characteristics of the new members of MVAs.
  • Assess the applications presented by the members of MVAs.
  • Ensure the establishment of mutual assistance among the members of MVAs, due to which the members of the MVAs, that have a portfolio with low percentage of overdue loans, can borrow credits in lower interest rates.

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Conservative Credit Policy

Bank Credit policy sets up :

  • The target group of customers: agricultural farms, natural persons, entrepreneurs, small and medium enterprises.
  • Crediting restrictions for some risky sectors and activities: for instance, the newly established enterprises are not credited.
  • Big variety of credit products for all type of activities and customers.

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Conservative Credit Policy

  • Gradual increase of the amount and terms of clients’ liabilities: disbursing short-term small amounts to the new customers and increasing the terms and amount of the loans in future by taking into consideration the credit history.
  • The dependence of the credit analysis and required documents on the credit amount: in case of small amounts - simple analysis and minimum requirements of documents, in case of big amounts - detailed analysis and documentation.

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Conservative Credit Policy

  • Flexible collateral policy, choosing the collateral based on the credit amount.
  • Using the system of delegations of authority on credit operations depending on the loan amount and branch competence.
  • Mandatory visits to the farms by credit specialists during the disbursement of loans.
  • Mandatory monitoring of loans for 1-4 times in a year, depending on the credit amount.

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Statistics on the Credit Policy

  • The amount of the credit portfolio: 253 mln USD (YE 2008).
  • The number of loans: 142,500 (YE 2008).
  • The yearly growth of the credit portfolio: 39% (during 2008).
  • NPL rate of current agricultural loans portfolio: 0.15% (YE 2008).

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Statistics on the Credit Policy

  • The maximum amount of the loan:
  • Long-Term Agricultural Loans: 158,000 USD for old clients, 79,000 USD for new clients,
  • Short- Term Agricultural Loans: 79,000 USD for old clients, 1,800 USD for new clients.
  • The average amount of the loan: 1,776 USD.
  • The maximum term of the loan: 7 years.
  • The average term of the loan: 2 years.

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Indicators Used to Assess Credit Portfolio

To control the credit risk and assess the credit portfolio quality a set of internal normatives and indicators are used.

  • Current loans concentration by sectors,
  • Weight of the 20 biggest non-performing loans,
  • Credit portfolio marginal concentration by 20 biggest borrowers.

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Bank’s leading positions

by main financial indices

35 branches in all big cities of Armenia;

11 % of the market by its capital (own capital);

74 % of the market by the agricultural loan portfolio;

16 % of the market by the volume of profit.


Key factors of the Bank’s success

Successful cooperation of the Bank with international financial organizations;

Rich experience of the Bank in the sphere of microfinancing, as well as financing of agriculture and small and medium enterprises;

Expanded net of branches and ATMs

Competence and high qualification of the Bank’s employees;

Permanent perfection of management of corporate methods as well as of banking risk management system.


The example of ACBA shows

ACBA - Credit Agricole can be a laboratory of microfinancing for different countries.

Together towards prosperity




Together towards prosperity