ARMENIA NEEDS EFFICIENT BANKING SYSTEM – OFFICIAL

11:28 * 25.03.15

Banks operating in Armenia are stable. They have been given time
to increase their capital by 2017, Andranik Grigoryan, Head of the
Department for Development and Stabilization of Financial System,
Central Bank of Armenia (CBA), told Tert.am.

The CBA demands that Armenia’s banks increase their minimum capital
from AMD 5bn (about $10.520m) up to AMD 30bn (about $63.135m).

“The decision evoked different opinions. I should note that it is
efficient operation of small banks that is in question,” Mr Grigoryan
said.

It will enable banks to more efficiently follow economic processes
and potential economic growth along with higher economic growth rates.

Although 30bn seems a great amount, the fact is that the 5bn minimum
was set ten years ago, and banks have since increased their actual
capital.

“At present, the average actual capital of commercial banks is AMD
15-25 billion. That is, they do not actually have to increase their
capital by AMD 25bn. And some banks will not even have to do it,”
Mr Grigoryan said.

All the commercial banks operating in Armenia appear to be capable
of meeting the new standards.

Mr Grigoryan does not rule out bank merger.

“By financial consolidation we mean raising the financial system’s
efficiency. It is up to banks’ owners and stockholders to decide. We
only say that only highly efficient banks must operate in Armenia.”

Banks have historically been developed structures in Armenia and they
must be capable of rendering long-term services to Armenia’s economy.

Banks must not cause any undue risk. Therefore, they have to have
huge capital to be capable of serving rapidly developing economy.

The issue has been discussed with banks for over two years.

“We were open to banks and the decision was made late last year. The
amendment was to take effect from January 2017, and, according to
the law, we are to inform banks two years before. We must create
conditions for banks to remain healthy, and they could raise their
efficiency by means of bank merger.

These are preventive measures,” Mr Grigoryan said.