The Central Bank Only Enhances the Controllability of the Banking System
29.01.2015
11:00
The decision of the Armenian Central Bank to raise the minimum capital requirement for commercial banks to 30 billion drams instead of the current 5 billion drams from January 1, 2017 will not ease the problems and possible crisis in the financial system.

Today at the Media Center initiated discussion Tatul Manaseryan, Head of the “Alternative” Research Center, economist; and Ashot Khurshudyan, economist, expert at the International Center for Human Development, spoke on the exchange rate of us dollar and financial stability in Armenia.

The decision to raise the minimal capital requirement, the Central Bank reports, is aimed at encouraging mergers and consolidation of banks which will be a big push and have a large-scale positive effect.

The experts disagree with the explanation of the Central Bank. They believe the changes may enhance the controllability of the banking system but they cannot soothe risks and spur competitiveness. “The decision to consolidate banks will not decrease financial crisis risks. Forcing all banks in Armenia to merge, consolidate or increase the capital they hold may drive the whole financial system into crisis,” said Ashot Khurshudyan.

The Armenian banking system presently includes 21 banks out of which five hold assets of over 30 billion drams. As of September 31, 2014 Ameriabank holds a capital of 41 billion drams, with VTB-Armenia, ACBA Credit Agricole Bank, Ardshininvestbank and HSBC having 50.1, 53.4, 47, 46.8 billion drams respectively.

The policy the Central Bank employed cannot prompt the competitiveness in the banking system either, Khurshudyan believes. “Though 21 banks operate in Armenia now, the system does not see a large-scale competition because banks have chosen to work only in one segment. Every bank has ventured into one separate segment and does not compete with other banks,” said the expert.

“The banks do not invest in the real sector of economy. They choose to invest in real estate sector which means we do not have economy,” he added.

Tatul Manaseryan said the bank consolidation is not a remedy to avoid crisis. He disagreed with claims that the bank consolidation may evolve risks and problems in the financial system. “The 2008 world crisis caused problems to large American banks but a lot of large banks retained their stable positions. So, I can’t find any correlation between big risks and bank consolidation,” Manaseryan insisted.

It is crucial to define how much banks facilitate the development of the real sector of economy, Manaseryan thinks. “The banking system must get involved in promoting economy. It is essential to have Government-funded projects with the private sector, and now it is underway,” said Manaseryan.

According to the expert, without an immune system and developed economy, the Armenian financial system will be vulnerable to external signals. “To illustrate, let’s remember the wild fluctuation of the US dollar in the Armenian financial market last November-December. Armenians suffered aftershocks of the Russian economy and the market was in panic,” he recalled.

The speakers noted the dollar and euro rates are likely to remain stable though shifts in oil prices may affect rates.

Videos
Print Friendly and PDF
More Press Releases
COVID-19: Without Panic, Please
25.05.2020
15:00
Today, on May 25, the Media Center conducted an online interview with Hasmik Ghazinyan, Infectionist-Hepatologist at "Nork" Republican Infectious Clinical Hospital.
"Tourism in Armenia under COVID-19"
21.05.2020
18:00
On May 21, at 6:00 pm, the Media Center organized an online discussion on "Tourism in Armenia under COVID-19".
"At What Age and How can a Child be Protected from Sexual Abuse?"
18.05.2020
14:00
On May 18, at 14:00, Media Center organized an online discussion on the topic of "At What Age and How can a Child be Protected from Sexual Harassment?"
“My Home is My Castle: How Safe Are We in That Castle? ”
15.05.2020
19:00
May 15 is Family Day.

On May 15, at 19:00, the Public Journalism Club invited a webinar. The topic was “My home is my castle: how safe are we in that castle?”
"Under what conditions will kindergartens be reopened?"
15.05.2020
14:00
On May 15, at 14:00, the Media Center organized an online discussion on the topic of "Under what conditions will kindergartens be reopened?".
Follow us on social networks
Registration of events
Services
Today at Media Center
June 1, 14:30
Discussion
"There will be vetting but how?"
Videos
Press Releases
Events
Armenia-Turkey Events