Loan

Credit activities of the Bank assume individual approach to each Customer and to each deal. In this section are presented general approaches that serve as guidance when defining credit fees, while the final terms and conditions of each deal/service are defined on a contractual basis.

Note

All legal and out-of-pocket expenses, including those related to security notarization and perfection, are borne by the Customer. Below are presented the approximate ranges of fees related to notarization and registration of the securities, however, it should be noted that in certain cases these fees may extend the mentioned ranges based on the specifics of the deal.

During the whole period of extended facilities for statements, advices, their copies and other information bank account respective terms, conditions, timing and tariffs should apply.

Range of fees is defined according to Law on Notary and Law on State Duty.¹

_{¹ According to the Law on Notary, there is a state duty which is charged by notary according to The law on State Duty, but the fee for notary actions/services is determined by the concrete Notary, the Government gives the ranges for fees and the maximum threshold above which the Notary has no right to charge.}

Credit activities of the Bank assume individual approach to each Customer and to each deal. In this section are presented general approaches that serve as guidance when extending credit facilities, while the final terms and conditions of each deal/service (including amount, interest rate, repayment schedule and fees) are defined on a contractual basis, depending on the nature of the deal, the level of perceived risks involved, collateral availability, Customer's account conduct with the Bank and other considerations. For detailed information and clarifications, please contact the representatives of the Wholesale Banking Department of the Bank.

Facilities are being issued to resident legal entities, while non-resident companies will be considered on a case-by-case basis. Applicants should have sufficient business history (at least 1 year). Target market includes business with international trade operating in manufacturing/production, wholesale and retail trade and service industry. Applicants should present detailed information and documentation on financial and operational performance of the business including but not limited to historical financial statements, business plans, required facilities and purpose, information about key stakeholders, trade terms, market share, etc. Customers will be advised individually regarding presentation terms and timing depending on requested information/documentation. Conditioned by various factors the Bank may require additional information/documentation during and after facility provision.

Credit amount, currency and provision order

There are no specific minimum thresholds for facilities, and the amount of facility is defined mainly based on customer needs, financial stand, security, cash flow and purpose of the loan.

The facilities are generally provided in Armenian Drams, United States Dollars and Euros. Fluctuation of foreign currency exchange rate may impact the loan repayment amount (for USD and Euro Loans). The loan is provided non-cash through crediting the respective current account of the Customer with the Bank, while in case of overdraft, the facility can be provided by allowing respective negative balance on the current account of the Customer.

Pricing

The pricing is made based on risk and return considerations and is in line with the current market conditions. Generally, the pricing depends on the purpose, amount, tenor of the facility, Customer's credit history, offered security, financial, operating, other risks involved, prevailing market rates, quality, reliability of the Customer financial accounts, as well as the overall Bank products usage of the Customer (FEX transactions, account balance, inwards/outwards, trade products). Interest rate is defined based on contractual agreement.

The facilities are generally extended at floating rate, defined as the Bank's base rate, plus a fixed margin. Bank’s base rate for different currencies is derived based on market conditions. Bank’s base rate is a floating rate which might be changed from time to time advising customers beforehand. Information on Bank’s base rate is available here, as well as in branches which is considered proper notification.

Calculation and payment of interest

The interest is accrued on a daily basis on the outstanding balance of the principal amount of the facility in the currency of the facility, unless otherwise agreed between the Bank and the Customer. The calculation of interest is based on a 360-days year.

The interest is payable in Armenian Drams on 25th day of each month (on next working day if 25th is a non-working day), unless otherwise agreed between the Bank and the Customer.

Repayment schedule

Repayment schedule is aligned to cash flow, customer's business need, project type, Bank’s risk appetite. More flexible repayment schedule and/or different frequency of instalments can be determined individually based on the specifics of each business and seasonal character of the Borrower's cash flows.

Early repayment fees/penalties are being negotiated with customers individually for each facility.

Tipically bank applies early repayment fees in all cases when customer makes early repayment to reimburse Bank’s unearned interest due to loan early repayment calculated based on the time and resources required for reinvesting early repaid funds.

Collateral

Though security is not the primary factor for the assessment of a proposal, the availability of adequate collateral, securing the requested credit facilities is necessary. We accept the following types of securities:

• Commercial and residential real estate
• Vehicle and Machinery pledge
• Personal guarantee of the stakeholders
• Corporate guarantee
• Marginal deposit /term deposit under lien
• Pledge over the stock/tradable goods (fixed/floating charge)
• Share pledge
• Government guarantees
• License pledge
• Assignment on cash flow
• Contractual obligations
• Indirect pledge right
• Other bank securities which as per credit and risk appetite may be deemed acceptable

The acceptable level of the security/facility ratio is determined taking into consideration the Customer's credit history, facility amount, security type, availability of audited financial accounts, risk and return considerations, and degree of liquidity of their security.

The property pledged to the Bank must be valued by either of independent valuators acceptable for the Bank and insured at the Bank's request by the Insurance companies by the Bank for the whole market value of the property acceptable for the Bank.

The valuation cost may vary depending on property type and features. The Bank also requires revaluation on an annual basis. Valuation instruction is submitted by the Bank and valuation fee is charged from customer account based on the provided invoice by the valuator.

Insurance premium may vary depending on the type of security specifics of the insured vehicle, the insurance coverage required and overall market development and typically is negotiated and agreed between insurance company and customer.

Insurance policy must be renewed every year throughout the duration of the credit. In case the Customer does not ensure the renewal of the collateral, the Bank will ensure it by itself at the account of the Borrower.

The deadlines and factors for decision making of credit application and loan provision/drawdown

Generally, factors leading to positive/negative decision making of credit facilities include financial assessment, purpose, amount, tenor of the facility, Customer's credit history, offered security, financial, operating risks involved, quality, reliability of the Customer financial accounts and decision is made individually for each client/deal.

The period for making decision on credit application depends on the complexity of the case, provided term and quality of requested information and documentation, product type, amount, term and is maximum 30 working days after the Bank has received all the necessary documents and information related to the application. In some cases, considering the specific nature of the deal, the decision may take longer to complete. The applicant will be notified about the respective decision within 3 working days after the decision has been made via relationship manager.

The loan amount is provided within 3 working days after receiving the written request of the Customer, once all the loan documentation has been completed and the security has been completed in due manner, with respective notarizations and registrations in state authorities in place, where applicable.

Important Note

1. Failure to make timely repayments of interest and principal will lead to this information record in the Loan Register.
2. If commercial banking facilities are provided in foreign currency the amount of repayments can be affected by the fluctuations of FX rates.
3. In case the Customer breaches its obligation under the respective agreement with the Bank, the Bank has the right to indemnify itself through collateral provided by the Borrower.
4. In case the securities pledged to the Bank are not sufficient for repaying the outstanding loan amounts of the Customer, the Bank reserves the right to indemnify itself through repossession of other properties of the Borrower in accordance with RA legislation.
5. In case of Borrower's failure or inadequate conduct related to meeting the contractual obligation the Bank has the right to demand full balance repayment of the extended facilities or repossession of the pledged collateral irrespective of the Customer's fault and/or force majeure circumstances.
6. In case you have outstanding obligations towards the Bank, the following repayment order will apply, when you fulfil your obligations:
   • Penalties
   • Interest
   • Principal

Information for guarantor

When providing guarantee, the guarantor should acknowledge all the consequences of the guarantee provision, including full repayment of the obligation and applicable penalties, negative impact on the guarantor’s credit history and even repossession of the guarantor’s property, in case the borrower does not perform their obligations.

The Bank is obliged to:

• Provide examples (copies of credit, guarantee agreements, repayment schedule with the notice “True Copy of original”).
• Provide information on outstanding amount of credit.
• Communicate with you by your preferred channel via post or e-mail.

• Notify you about the changes to the terms of the agreement 7 working days prior to those changes are made.

  In addition to the clause:

  • In case of negative change, the Bank is obliged to submit an offer, the guarantor may accept it or not.
  • In case of a positive change or a prior consent, the Bank is obliged to notify you within one working day after the change is approved. Remind you about the credit obligation one day prior to its due date.
• Notify you about delayed credit repayments at latest 1 day after the delay.
• Notify you about termination of the contract within 7 working days.
• Indicate the amount and provide at least 7 working days for payment in case of demand.

You have the right to:

• Request information from the Bank on the credit’s residual amount at any time.
• Claim from the borrower the credit amount paid by you, as well as other losses borne by you instead of the borrower.

To apply for a standard credit facility, the following documentation should be presented.

• Financial accounts (including notes) of the company for at least two previous years.
• Cash Flow Projection/historical cash flow, budget, financial model.
• Non-financial information including suppliers (contract terms, agreements), buyers, competitors, market share (information regarding industry), operating model, management and ownership structure.
• Offered security related information.

After approval of the credit application, the Bank will ask the Customer to provide documents necessary for loan and security agreement preparation and signing, or to ensure that these documents and information are available for the Bank by paying respective applicable charges.

Below is the list of the main documents that the Customer may need to provide which is not exhaustive. The list may differ from case to case (depending whether the transaction is significant or not, security type, etc.), thus, during documentation review each Customer will be advised individually regarding required documents, presentation terms and timing.

* To be noted that if the company/company shareholder/company participant involved in the transaction is registered overseas, additionally the following documents may be required (the list is not exhaustive and depends on the case):

• Certified copy of Company’s Charter, Founding documents, Charter Amendments (if any)
• Certified copy of Company’s State Registry Certificate and Director Enclosure or otherwise certified information on company registration and executive body
• Certificate of Good Standing and/or Incumbency Act and/or Certificate of Incorporation with notary and Apostil certifications
• Passport/ID copy of director with notary and Apostil certifications
• Minutes of Meeting and/or Resolution/Decision and/or General Power of Attorney regarding confirmation and authorization of the transaction

** Regarding Credit/Insurance organizations and other companies which are registered by CBA and have to publish the respective information on their website, information/documentation mentioned above can be retrieved from the company’s website.

!! In case if the guarantor and/or security owner is a Legal entity, documents mentioned in “Legal entity related documents” section should be requested.

_{¹ In case of the ownership certificate is issued before 2018 the original Ownership certificate will be requested only for Sell and purchase (S&P) purposes.}