2016 It will be a year of structural changes, consolidation and strengthening of the banking system for the banking system of Armenia. Artak Hanesyan, the chairman-general director of the Directorate of "Ameriabank" CJSC, told about this in an interview with "Tert.am" reporter.
- Mr. Hanesyan, judging by everything, 2016 will be marked for the banking system of Armenia. How dynamic will the change in the banking market be, and what do you think the Armenian banking system will look like at the end of the year?
2015 It was quite a difficult year for the banking system of Armenia. The difficulties were due to the fact that the banking system sought to provide growth, which did not happen, and the difficulties were related to the quality of the banks' assets, which became the main problem of the previous year. Banks were incurring high costs in making allowances for potential loan losses, and as a result there was a need to address the capital adequacy problem.
Last year we witnessed two bank mergers, several banks replenished their capital. An important role in this process was played by the decision of the RA Central Bank regarding the increase of the minimum amount of regulatory capital from 2017.
Despite all the difficulties, in my opinion, in 2015, the banks prepared a good foundation for further activities. In 2016, we expect a more stable situation in terms of asset quality. I do not think that it is worth waiting for high indicators of growth of the banking system in 2016, the problem of this year is not that at all, but the consolidation and strengthening of the banking system. A positive movement will be observed in the direction of the sale and liquidation of problematic assets, the process of bank expansion will accelerate, as the capital of half of the banks does not meet the requirements of the new Central Bank regulation, the transactions of acquisitions and mergers will increase. As a result, at the end of 2016, the indicator of the minimum capital size of banks will increase, the banking system will become more reliable, transparent and understandable for customers and shareholders.
- Despite the difficult economic situation, Ameriabank showed growth in all main indicators in 2015, and the bank's assets exceeded 1 billion dollars. How do you manage this and what new growth opportunities does the EBRD and IFC equity participation in Ameriabank create?
We always evaluate the market situation from the perspective of long-term development and try to solve all short-term issues and problems, taking into account the target indicators that we want to achieve in the long-term. The most important advantage in such difficult situations is the team's cohesion and professionalism. However, at the base of the bank is not only the team, but also the internal normative base, risk management, corporate management, decision-making procedure. Of course, in favorable years it is not difficult to ensure growth, to develop at a fast pace, to increase assets and liabilities, but the real value of the company is seen during the crisis. That's when it becomes clear how stable the bank's foundation is and whether it can withstand various challenges. Despite the fact that in 2015 was not the most successful year, we continued lending and financed attractive and, in our opinion, low-risk projects.
Our assets crossed the $1 billion mark, which is very important for us, and I think this is symbolic for the banking system as a whole. We also continued our cooperation with international financial institutions. Last year, we signed two financing deals: $20 million with the OPEC Fund for International Development (OFID) and $25 million with the Dutch Development Bank (FMO). Thus, we attracted 45 million dollars for further lending to the Armenian economy. And thanks to the deals concluded with the EBRD and IFC, that number increased by $90 million, of which $40 million is the direct investment of the EBRD in the capital of Ameriabank, and $50 million is the subordinated loan fully provided by IFC in December 2015. the loan. We have created all the preconditions for the further growth of the bank and lending to the real sector of the Armenian economy.
- What business development plans do you have in connection with the mentioned transactions?
After concluding transactions with EBRD and IFC, the bank's capital increased by $90 million, that is, almost twice, which enables us to attract $500 million, including from international financial organizations. Of course, it does not mean that we intend to attract those 500 million dollars in the current year, because the mentioned funds still need to be allocated in the market. Along with raising funds, we need to increase lending to the real sector. We plan to lend to the largest taxpayers, increase the volumes of SME and retail lending.
- To what extent can your cooperation with international financial organizations affect the bank's pricing policy in the field of lending?
The bank's pricing policy depends on several factors. First of all, if we talk about borrowing in foreign markets, it is the LIBOR rate, the second factor is the sovereign credit rating (country risk), and the third factor is the corporate risk. EBRD's equity participation in Ameriabank and the deal with IFC have a positive impact on the third of the pricing components I listed: corporate risk. The LIBOR rate is currently rising and country risk is unchanged. Therefore, no drastic changes are expected in the bank's price policy, neither in the direction of increase nor decrease.
- After the mentioned transactions, the Bank's total capital enables to significantly increase the loan portfolio. At the same time, the current situation of the lending market is not very favorable. Is the Armenian market not getting narrow for you, do you plan to enter other markets?
The allocation of financial resources of such a volume in the domestic market, when the issues of creditworthiness and viability of Armenian companies are still relevant, is of course difficult. But that doesn't mean there is no domestic market. It exists, and we are focusing on the development of the domestic lending market. There are several large projects to be implemented in Armenia, including through our loans. We also intend to create conditions for the growth of SME lending. This can be done not only by reducing interest rates, but also by revising the requirements for potential borrowers, in particular, the security measure, softening the requirements for the company's accountability, shortening the terms of examining loan applications, and other steps. The mechanisms are in place and I am confident that they will lead to a positive outcome. Thanks to the mentioned policy, we will increase our credit portfolio by at least $100 million. In addition, we plan to acquire another bank and may use existing resources for this purpose as well.
As for entering the regional market, we have and have always had such plans. But everything depends on the situation, market development trends and available offers. If we receive an offer to buy a bank in the region, particularly in Georgia, we are ready to consider that possibility as well. That question is not closed for us. But we prefer to acquire a bank in the domestic market and only then enter the regional market.
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