ARKA News Agency, Armenia
March 25 2006

INTERVIEW

FINANCIAL COMMUNITY SHOULD BE INFORMED OF ARMENIAN BANKS’ ADVANCED
EXPERIENCE

Below is an exclusive interview of Chairman of the Union of Banks of
Armenia (UBA) Stepan Gishyan to the ARKA News Agency

– Mr. Gishyan, Your appointment as Chairman of the Union of Banks of
Armenia implies certain innovations and specific steps in this
direction

– True, this appointment imposes a high responsibility. First of all,
it is the responsibility for all 14 members of the association. These
are rather stable banks, and we all have to closely cooperate. I
would like to note that a number of amendments to the UBA Regulations
have been made. It particularly concerns the rotation principle of
electing the UBA Chairman and Board members. A decision has also been
made to increase the number of the Board members from six to nine,
who will yearly be elected by the rotation principle, which will
allow the banks to intensify their work as UBA members and afford an
opportunity for considering all the members’ opinions in the
decision-making process. In fact, we have always had an unwritten
law, namely, making collective decisions. Now this unwritten law will
become an official one. All the banks are willing for active work.
The UBA’s concept is in ensuring the involvement of all banks in the
Board. Our idea is that not only the Board Chairman, but also the
Board members work more actively. In principle, the Chairman is
supposed to perform the representative functions to a greater extent,
and all the most important issues are to be dealt with by the UBA
members.

-Chairman of the Central Bank of Armenia (CBA) Tigran Sargsyan
recently mentioned 2-3 problematic banks. As far as we know, these
problems resulted from disagreements over corporate management.

– I think that all Armenian banks accept the principle of corporate
management. As regards the UBA members, I can state with confidence
that all of them accept this principle. By the way, it has always
been in effect in Armenia. The CBA’s concept just made it more
specific, which is normal. After all, it is a law, and we must
observe it. Banks were actively involved in discussing this law with
the CBA. Agreements were reached on almost all points. Another
question is the existence of different opinions on individual aspects
of this principle, which need attention. And this is a subject of
discussions. We will take an active part in discussions in future as
well, promptly responding to the CBA’s decisions and initiatives.
This is, in fact, our role.

– What is Your appraisal of Armenian banks’ activities?

– I think everybody will share my opinion that we have never had such
a healthy banking system as now. Banking indicators are indisputable
evidence of positive trends in all directions, positive dynamics. All
the banks record increase in their advances portfolios,
simultaneously recording a very small amount of overdue credits,
which is evidence of higher quality of banks’ advances portfolios.
Increasing healthy competition plays a great role as well, which is
certainly a positive fact.

– What is Your assessment of the UBA’s policy of international
contacts?

– We are a member of the International Banking Federation and intend
to intensify our ties both with this structure and with other
international organizations. We have all preconditions for this. I
think that Armenia’s banking system may set an example to many
countries, particularly to the CIS member-countries. We have left the
banks of many countries, even Russia, behind as to quality,
organization and transparency. We have serious achievements in this
field – both by the CBA and by commercial banks. All this taken
together, as well as some geopolitical developments, gives us a
chance to become a regional financial center. Therefore, we should
take certain steps in this direction, and I see a field of activities
for the UBA jointly with the CBA.

– What specific steps are in question?

– One of them is making ourselves better known, informing the
financial community of our experience. We do have achievements.
Although relatively small, our banking system is an advanced one, our
Central Bank is a member of the Basel Committee, and the CBA Chairman
has been Chairman of this structure. We are ahead of our neighbors,
and they admit this fact. We also have to increase the capitalization
of Armenia’s banking system, involving foreign banks as well. In this
context, I can only welcome the EBRD’s intensified activities in
Armenia. The appearance of any international structure is of great
benefit to our country, though some fear competition. But this is a
necessity, and we must be ready for that. P.T. -0–