On June 24, Yerevan will host the Annual Meeting of the Black Sea Trade and Development Bank (BSTDB) which will be preceded by the business forum organized by the bank on June 22 where investment opportunities of our country will be presented. Armenia is one of the founders of the international financial institution, the  main mission of which is to contribute to economic development and regional cooperation of the member states through providing trade and project financing to the public and private sectors. Although Armenia’s share in the bank’s chartered capital only makes 1 %, its share in the Bank’s portfolio of operations amounts to 4.6% (6th among 11 member countries). President of the Bank Andrey Kondakov told about BSTDB plans and the upcoming events in Yerevan in his interview to Mediamax and Banks.am.

- Mr. Kondakov, what are key issues to be discussed at the BSTDB Annual Meeting in Yerevan? Is the choice of Armenia for your Annual Meeting based on just rotation principle or there are any other reasons?

- As a rule, the Bank’s Board of Governors meets annually and the meetings, which are usually held in June, focus on discussion of the most important strategic issues of the Bank’s operation. This year it will be the execution of Medium-Term Strategy for 2011- 2014, the annual report for 2011, the impact that the current tough situation in Greece and Eurozone have on the Bank and whether or not it will require any adjustments . We think there is no need to adjust our business strategy – the Bank is developing as planned and it has posted a very good positive net income for the seventh consecutive year.

As for the host country of the forum and the Annual Meeting, it’s determined by the alphabetical order. 

- How probable, in your opinion, are the changes in the Bank\'s strategy due to the Greek crisis?

- The Greek crisis is specific and it\'s unlikely to affect the Bank\'s strategy. Although, a certain psychological factor exists as some of our potential investors do not fully realize that the Bank is an international organization, simply based in Greece. Our Greek portfolio is not very big and we don’t see problems there.

Another issue is that our strategy envisaged aggressive growth of about 15% a year, and even if we are touched by these problems, they’ll affect only the growth rate, not the active portfolio .

- During your visit last year, you mentioned that the objective of the Forum will be to show Armenia’s investment potential and opportunities. In your opinion, as a small and relatively isolated economy, how Armenia may attract significant foreign investments? In your view, what are Armenia’s comparative advantages in the region? 

- The Forum will be held on June 22 – before the Meetings of the BSTDB Board of Directors and Board of Governors. Such forums have become a traditional part of our Annual Meetings. We want to show the investment potential of your country at the Forum. 

Indeed, the investment potential of your country is limited and it motivates you to work very thoroughly and attentively on the development of economy. First of all, you have good macroeconomic indices, Armenia is one of the rare countries to have overcome the financial and economic crisis. As of 2011, the country’s GDP grew by 4.6%, the country registered low inflation, which is a very important index for us, and low public debt.

We feel very comfortable investing in your banking sector, because it’s very well managed. Banks are quite sustainable, transparent and predictable – we use them as financial intermediaries, which in their turn onlend to small and medium enterprises. We also consider launching mortgage financing in Armenia and funding enterprises through the newly established Caucasus Investment Fund. 

In the real sector, we finance the food industry and agribusiness, and we will continue increasing our portfolio in these sectors. In the retail sector, we work with SAS Group. Last year, the company decided to expand their business in Georgia as well, opening a chain of Next apparel shops there. One of the shops of the chain was located near the hotel in Tbilisi where we stayed. We entered the shop and saw a queue there.

I would also like to note that we are examining an interesting project in the telecommunication sector of Armenia. It will be a direct project financing of the company engaged in improving infrastructure of the broadband internet access. 

- As far as we know, the above mentioned Caucasus Investment Fund will make equity investments in promising enterprises. What is the BSTDB participation in the capital of the Fund and on what projects of the Fund will you focus?

- The Fund was officially launched in Armenia on April 27, 2012.  The initial capital of the Fund is $40mln, of which the Bank’s share is $10mln. In future it\'s planned to increase the capital of the Fund up to $70mln. The Fund will specialize on equity  investments in small and medium-sized  enterprises of the private sector.

- Last year, BSTDB invested €15 million in Armenia. How much the Bank is going to invest this year? 

- We plan to double our portfolio in Armenia over the period of 2011-2014. BSTDB has funded 12 projects to a total amount of €50mln. If we manage to implement the projects we are working on this year, the volume of investments will be at least €15mln or more.

On the whole, we feel quite comfortable in Armenia and we have a high level dialogue with the Armenian Government and the Central Bank. 

- The Bank agreed about its new strategy for Armenia with the Armenian Government last year. We know that the Government drew the Bank’s attention to funding agribusiness as a priority sector. Are there any developments in this area?

- Yes, we have already several projects in agribusiness. One of them is the  construction of a meat processing factory by Natfood company, which will be launched soon. We have also financed Euroterm company that is producing packaging materials for agricultural products . One more our project in the food industry is Beer of Yerevan company.

-What are the similarities and differences of BSTDB’s activities in three South Caucasian countries?

- We feel comfortable in all three countries. We started from the banking sector in all of them, and it continues to dominate our portfolio in Georgia and Azerbaijan. In Armenia we have managed to achieve a more diversified portfolio by investing in the  real sector.

We have found interesting projects in Armenia\'s real sector and we are trying to achieve the same results in the other two countries.

Ruben Harutyunyan talked to Andrey Kondakov