EBRD and Amundi-ACBA collaborate on cross-currency repo transaction

The European Bank for Reconstruction and Development (EBRD) and Amundi-ACBA Asset Management are joining forces to facilitate access to local currency financing and strengthen the local capital market in Armenia.

In an innovative move, the EBRD and Amundi-ACBA have executed the first cross-currency repo transaction, setting a new threshold for secure and strategic financial transactions in Armenia. The transaction was executed under the Global Master Repurchase Agreement, which the two entities signed on 21 June 2023.

This landmark transaction has allowed the EBRD to pledge high-quality liquid assets denominated in hard currency and receive local currency funds in return. This cross-currency repo agreement serves as a secure avenue for Amundi-ACBA to deploy pension fund assets, while remaining aligned with its commitment to prudent financial management.

For the EBRD, the transaction secures long-term Armenian dram funds at onshore market rates, helping to strengthen and diversify its funding sources.

The economic impact of the transaction is significant, and the EBRD is dedicated to maximising its effect. The proceeds will be strategically reinvested into the real economy, creating a positive transition impact and contributing to the Sustainable Development Goals.

Gursu Keles, EBRD Associate Director, Senior Trader, said: “The EBRD continues to invest in the local market’s financial capacity and know-how by employing simple yet innovative products in its portfolio management. Cross-currency repos will be an additional tool to expand and strengthen our funding base in Armenian dram.”

Hrayr Aslanyan, Deputy CEO at Amundi-ACBA, said: “This is another innovation we are pleased to introduce to the market, together with the EBRD. This scheme will allow us to deploy pension fund assets more effectively, contribute to developing the local capital market and, ultimately, help to finance the local economy.”

Amundi-ACBA Asset Management manages three mandatory pension funds in Armenia, with assets under management surpassing AMD 400 billion (€900 million). The company has extensive expertise in fund management and is owned by Amundi, a leading European asset manager, and ACBA Bank, one of the leading banks in Armenia.

This is the second time the EBRD has engaged with Amundi-ACBA Asset Management in Armenia. The agreement is part of the Bank’s efforts to step up its local currency lending and further develop the capital markets in Armenia. This innovative transaction secures reliable access to domestic currency liquidity, while eliminating foreign currency risks for local borrowers.

The EBRD is the leading institutional investor in Armenia, active in all sectors of the economy. Since the start of its operations in the country, the Bank has invested more than €2 billion in 210 projects in its financial, corporate, infrastructure and energy sectors, with 92 per cent of investments in the private sector.