Ameriabank's green journey
Despite the turbulent year, Ameriabank was able to launch Armenia’s first-ever Green Bond in 2020, with FMO as anchor investor. “The green bond project was a milestone not just for us but also for the Armenian financial market in general”, says Gevorg Tarumyan, Deputy CEO, and Chief Financial Officer at Ameriabank.
FMO has a longstanding partnership with Ameriabank, the largest financial institution in Armenia. Since 2009, FMO and Ameriabank have taken a wide variety of steps together, including the provision of a subordinated loan, various senior debt facilities, and a loan targeted at youth entrepreneurs. In 2019, FMO and Ameriabank embarked on a green finance development journey, leading to the launch of Armenia’s first ever Green Bond in 2020, enabling capital-raising and investment for projects with environmental benefits.
Ameriabank already had a leading position in renewable energy within the financial sector in Armenia. Still, being able to launch a Green Bond and adhere to the (voluntary) requirements of the Green Bond Principles, developed by the International Capital Market Association, was a big next step. “One of the biggest challenges was the alignment of our existing green business with the Green Bond principles—learning the jargon, so to say,” says Gevorg Tarumyan, Deputy CEO, and Chief Financial Officer at Ameriabank. The principles promote integrity in the Green Bond market through guidelines on transparency, disclosure and reporting. “With FMO’s support and efficient project management within our teams, we managed to bring everything in line with ICMA’s Green Bond Principles.”
Tarumyan calls the issuing ‘a leap and a milestone project not only for us, but for the Armenian financial market in general.’ We have always been known in the market as a trendsetter in Armenia, so we believe more and more green bond placements will follow in the coming years. It is a unique product in a sense, that the issuer commits and makes sure that the entire flow of funds is green, with compliance to green bond principles.”
One of FMO’s goals in investing in frontier markets is paving the way for commercial money to follow. Ameriabank sees it happening already. “Based on the publicity this transaction received, some commercial investors already reached out to investigate if they can buy a portion of these green notes. It accelerates our plan to crowd in commercial investors for Ameriabank through this (and more to follow) green bonds. And most importantly, success of Ameriabank in capital markets is eventually translated into that of our customers, as their ability to finance more and more green projects grows.”
On the relationship with FMO, Tarumyan comments on the mutual trust. “We are happy to see that cooperation with FMO goes beyond attraction of financial resources. Every deal we did with FMO so far was not just a repeat transaction, but genuinely novel in its nature. Perhaps the most important aspect of our collaboration is the very trust we have mutually earned throughout these years. While it has no monetary equivalent, we highly appreciate it.”