Foreign portion in total capital of Armenian Banks hit 73.20% in May

25.07.2013 17:01
Foreign portion in total capital of Armenian Banks hit 73.20% in May

YEREVAN, July 25./ARKA/. The portion of foreign capital in the authorized capital of Armenian commercial banks inched down by 0.2 p.p. in May from earlier this year to 73.20%.

According to the Central Bank of Armenia, the portion of non-residents’ capital in the total capital of the banks sharply grew from 58% in 2007 to record high 78.90% in 2010. However, since 2010 we have witnessed some tumbles in foreign capital, and this figure fell to 73.10% in 2012 against 75.10% in 2011 ( minus 2 p.p.).

http://www.armbanks.am/wp-content/uploads/2013/07/12.jpg
Source: CB of Armenia

The foreign capital will be furthermore growing in Armenia as Basel 3 norms are to be introduced in the republic  in 2014. Basel 3 doesn’t imply any changes in capital amount requirements, but it tightens the requirements to the structure and quality of the capital –the ratio of basic and supplementary capitals changes. It also introduced short-term and long-term requirements to liquidity minimal level and creation of two capital buffers: conservation buffer (2.5%) and countercyclical buffer ( from 0 to 2.5%).
The 1Q 2013 interim financial reports of the Armenian banks say the credit organizations have no problems with capital adequacy H1, it stands at 12%.  It exceeds 15% at 12 banks though, hits 13.02%-14.44% at 5 banks, and  12.02% - 12.70%- at 4 banks.
Despite this, some of them will have to seek for supplementary funding either at the domestic market or by attracting foreign investors.
The experts say the presence of the foreign capital in Armenia proves the Armenian banks are attractive for foreign investors.
Ashot Osipyan, Executive director-Chairman of the Board of Araratbank, said it showed the banking system of the republic was transparent and open. He doesn’t see any potential threats in such great portion of the foreign capital for the stability of the Armenian banking system. According to him, the same risks exist with the domestic capital.
In 2012, the highest portion of the foreign capital was owned by the European Union member states – 31.6%, Russia-15.3% and Switzerland -4.2% ( in 2011: EU-29%, Russia-16.8% and Switzerland-4.4%).
The authorized capital of Armenian banks in 2012 was 244.1 million drams, which was by 4.3% higher from 2011. Three banks added 10.2 billion drams to the total capital last year; of them 9 billion drams came from foreign sources. The authorized capital of the banks stood at 251.6 billion drams in May 2013.
As of May 2012 there were 21 banks in Armenia. Some 1,644 individuals and legal entities are the members of the banking system, of them 86 are non-residents. -($1-410.33 drams). —0-


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