Saribek Sukiasyan: All the Banks Staying in the Market Will Have Excess Resources

Mr. Sukiasyan, the resolution of the Central Bank, which sets a minimum regulatory capital of AMD 30 billion for Armenian banks is effective from 1 January 2017. Is ARMECONOMBANK able to meet this requirement?

Certainly, it will. Another distribution of ARMECONOMBANK’s shares was completed on 25 of October, and the result will be submitted for approval at the General Meeting of Shareholders in about a month, and then for registration with the Central Bank. ARMECONOMBANK has distributed 145,000 shares at AMD 14.600 per share. After the registration of the results of the distribution by the Central Bank, ARMECONOMBANK’s regulatory capital will amount to AMD 31 billion, hence we can already state that the Bank’s regulatory capital is in compliance with the aforementioned requirement.

Lately, there have been a lot of complaints related to the high interest rates for loans. Do you see any possibility of reduction for these rates?

Such kind of discontent has been voiced earlier, too. People usually compare the average interest rates applied in Armenia with, for example, Western countries, where these rates are lower. We understand their dissatisfaction, since the loans with lower interest rates and deposits with higher interest rates are the most attractive for customers. However, the interest rates for loans and deposits are directly interrelated, and if the banks reduce the interest rates for their loans, the interest rates for deposits will decline as well.

I believe that 2017 will open a new page in the history of the Armenian banking sector, since that is when the real competition of the banks will start. All the banks staying in the market will have excess resources and will try to attract as many customers as possible.

With free resources available, it is natural that the interest rates on deposits may decrease. Yet, we should also consider that the Armenian banking sector pays nearly AMD 150 billion in interest to depositors per year. This is a significant amount, which also means that thousands of people are indirectly engaged in business, that is they gain income on placed deposits and pay income taxes.

Mr. Sukiasyan, recently there were media publications claiming that the Central Bank forces commercial banks to transfer their employees’ accumulated amounts to pension funds. Are these claims credible, and has ARMECONOMBANK encountered such an issue?

”I find such publications baseless. The Central Bank of Armenia is a supervisory authority, I can assure you that there have never been any compulsions against ARMECONOMBANK related to this or any other matter. Yes, the Bank remunerates its employees, but employees are free in their choices of savings management, while the Bank merely acts as their tax agent.

2016 is not over yet, but as stated by many, it was a rather hard year for the Armenian banking sector. How was it for ARMECONOMBANK?

Attempting to sum up this year, I would like to mention that we have invested a great deal of energy and resources. ARMECONOMBANK has expanded significantly, and now we have 47 branches, compared to the 40 we had at the beginning of the year. We have achieved growth in all main indicators, and the scope of the partnership has expanded significantly.

In 2016, the Bank’s equity increased on the account of share emission, consolidation, and investments made by our family, as we managed to meet the Central Bank’s AMD 30 billion regulatory capital requirement.

And the last question: How is cooperation between ARMECONOMBANK and international financial institutions progressing?

As before, the Bank has been closely cooperating with its traditional partner and shareholder, the European Bank for Reconstruction and Development. In 2016, the Bank attracted USD 34 million from overseas funds, such as Symbiotics S.A., BlueOrchard Finance S.A., and Incofin Investment Management, of which USD 24 million was directed to the financing of small and medium businesses. Also, ARMECONOMBANK attracted more than AMD 1.7 billion through the Central Bank’s project from funds sources managed by the German-Armenian fund of KfW and other sources, the bulk of which was directed to the development of micro, small, and medium businesses.

Currently, we are negotiating on further attractions, and I hope that we will have a larger volume of attracted funds by the end of the year.

ARMECONOMBANK has always been a steadily developing bank with new attractive offers available to its customers, and our interests always meet.

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