The European Bank for Reconstruction and Development (EBRD) announced on Monday that it has signed an agreement with HSBC Armenia for a $10 million loan to support the industrial and residential renewable energy sectors.

The funds will help HSBC Armenia extend loans to companies willing to make capital investments in equipment, machinery and other fixed assets that are designed to improve energy efficiency and reduce more than 20 percent of their energy consumption.

The facility, which has a maximum term of five years, comes under the EBRD's Caucasus Energy Efficiency Program (CEEP) aimed at encouraging companies to make better use of their country's energy resources.

The CEEP is supported by grants from the Austrian Ministry of Finance, the European Union Neighborhood Investment Facility and the EBRD Shareholder Special Fund.

HSBC Armenia had a commercial lending portfolio of $317 million in the first quarter of 2014 and has posted strong results in recent years.

The EBRD has been one of the largest outside investors in Armenia, investing more than $935 million in 129 projects since the country's independence.