Armenian banks not in 2011 CIS top 100 banks rating because of their size- EBRD

20.07.2012 13:11
Armenian banks not in 2011 CIS top 100 banks rating because of their size- EBRD

YEREVAN, July 20. /ARKA/. The fact that Armenian banks had failed to enter 2011 CIS top 100 banks rating  is triggered by their being fragmented and small sized, Head of EBRD office in Yerevan  Valeriu Razlog said in the interview with ARKA agency.

Banks of Armenia and credit organizations of a number of other countries (Kyrgyzstan, Moldova, Tajikistan and Turkmenistan) failed to enter 2011 CIS 100 top banks rating compiled by RIA Rating agency.In spite of the growth in assets reported by the five largest banks of Armenia in 2011, it was still lower than it is required to enter the rating list. The minimal benchmark necessary to enter the rating climbed by 19% in 2011 to $2.12 billion. Thus, in order to be listed in top 100 banks of CIS the largest Armenian bank will have to surge its assets by $1.55 billion.

Razlog said the Central Bank of Armenia, Union of Banks, EBRD and other international structures should direct their actions to Armenian banks merger and development. However, this process should not be obligatory and must be implemented step by step.
He highlighted that the market should dictate its own conditions, and the banks understand themselves that freedom for their organic growth is dropping, and they need purchases, merger with other banks in order to expand their opportunities, introduce new services at the Armenian market ensuring stability in the banking system of the country.

Razlog also clarified that bank consolidation will be their common purpose for the next several years.
Chairman of Union of Banks of Armenia Ashot Osipyan, on his side, agreed that the failure to enter the rating was explained by the size of local market.
“There is no tragedy at all. Ranking of assets and equity doesn’t give anything. Maybe just a large bank which can easily and quickly collapse,” he said.
According to Osipyan, the belief stating the larger the bank is the more difficult it is to bankrupt dissipated as the crisis happened.

He pointed out that the banking community will welcome any mergers or takeovers at the market.
“We want this happen coming out of market demands rather than some administrative impositions. The market should define itself whether it needs any  mergers or not, and what kind of mergers it actually needs,” Osipyan said adding that the Armenian banks have all chances for growing.
At present there are 21 banks in Armenia. As of May 31 the total assets of the Armenian banks account over 2 155,6 billion drams (rise by 1.4% from April), the total equity - 365,9 billion drams (up by 1.2%).

The Armenian banks earned over 11.2 billion drams in Jan-May of this year which is 19% lower from the same period a year earlier.
Total assets of 100 largest banks made $1.23 trillion as of January 1 of 2012, higher by 12.5% from a year earlier, according to the agency. The dynamics has slightly deteriorated from 2010 when the growth in assets was 15%. ($1 – 411.66 drams). —0--

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