Mediamax Agency, Armenia
Feb. 25, 2008

Armenian banks are well capitalized and profitable, but the financial
sector lacks diversification, the EBRD report reads

Yerevan, February 25 /Mediamax/. The banking sector of Armenia is
fully privatized and has undergone primary consolidation, which was
followed by increase in mid-2005 of the requirements as to the
sufficiency of the capital’.

Mediamax reports that this is stated in the report of the European
Bank for Reconstruction and Development (EBRD) on the process of
transition for 2007.

`In January of 2006, consolidation of the banking and non-banking
control within the framework of the Central Bank of Armenia took
place, and today such control covers 400 insurance companies, credit
organizations, broker companies and exchange points.

This assisted the increase of prudential standards for non-banking
financial mediators and led to revocation of a few licenses. In 2006,
a system of insurance of deposits was implemented, and the banks
passed on to the International standards of financial accounting.

On the whole, the banks are well capitalized, are liquid and
profitable, and the quality of credit portfolios remains relatively
high. At the same time, the financial sector lacks diversification,
and the non-banking financial sector remains small.

The growth speeds for private crediting increased, especially
concerning consumer and mortgage credits, however, the total share of
the credit activity in the economy still makes less than 10% from the
GDP’, the report notes.