HEAD OF CENTRAL BANK OF ARMENIA ON MAIN TASKS AND OBJECTS OF
DEVELOPMENT OF BANKING SYSTEM

YEREVAN, FEBRUARY 2. ARMINFO. The main reforms in the banking system
of Armenia, being implemented during the last 5 years, were aimed at
implementation of 4 main tasks: to ensure growth and competitiveness
of banks, support for their liquidity and stability, perfection of the
mechanisms of management of risks, increase of the quality of produces
and services. Head of the Central Bank of Armenia Tigran Sargsian
stated during the 15th Conference of regional Group of Basle Committee
for Banking Supervision of the states of TransCaucasus, Central Asia
and Russia.

According to the main banker, high level of competition in the banking
system is seen during the last 2-3 years, especially in the market of
crediting and in particular in the segment of consumer crediting. Only
during 2004 the growth level of the portfolio of the consumer credits
in the banking system of the country increased by 60%. This process
accompanied by quite high rates of capitalization and general growth
of provision of crediting in the economy, which increased by 29% (64.7
bln drams) and by 37% (139.7 bln drams) respectively. The ration of
the assets of the banking system (363.6 bln drams) to the GDP makes up
19%.

Tigran Sargsian stressed that qualitative changes took place in the
sphere of liquidity control during the last years. Today the liquidity
level of the commercial banks is rather high (20-25%) and there are
serious problems with management of liquid assets, as the real sector
of the economy is not ready <for example> for large volume of credit
resources. He stressed that the Central Bank has introduced quite
effective methods of risk management. He said that the CB Board has
made a conceptual decision on gradual switchover to new stricter
standards of banking supervision, based on the principles
“Basle-2”. He mentioned that one should not blame only the real sector
for the low level of mediation. The real sector is not regulated
enough and is working in the shadow. The problem is also in the
spectrum of products and services, which the banking system may offer.

First of all, the problem often concerns the insufficient level of
management in the banks. “We have elaborated indices which allow to
estimate impartially the fact how the commercial banks manage this
problem. The necessity of introduction of rules of corporative
management is considered as a strategic direction”, Tigran Sargsian
stressed.