There is good news in the Armenian banking market. "Ameriabank" CJSC signed two major deals with international financial institutions. According to the signed agreements, the European Bank for Reconstruction and Development (EBRD) invests 40 million dollars in order to acquire a package of shares of Ameriabank, and the International Finance Corporation (IFC) provides a subordinated loan of 50 million dollars to Ameriabank. Thus, Ameriabank, which is the leader in the banking system of Armenia, increases its capital to such an extent that it becomes an unbeatable leader in the banking market of Armenia. In a conversation with a NEWS.am reporter, Andrey Mkrtchyan, Chairman of the Board of Directors of "Ameriabank" CJSC, summarized some results of the bank's activities and presented the plans for the future.
Mr. Mkrtchyan, 2007 "Ameria" group of companies acquired Armenartbank, which "had nothing but authority and a rich history". This is exactly how you described the bank in one of the interviews. Today, Ameriabank is the leader of the Armenian banking system, the bank's assets have exceeded 1 billion dollars. How did you manage to achieve such outstanding results in such a short time?
Yes, we acquired the bank in 2007. at the end of the year and in 2008 We started active work in January. It was a small bank with a capital of $9 million, assets of $45 million, and a staff of around 30 employees, including administrative and technical staff. Today, when we summarize 2015 the results, Ameriabank's assets already exceed 1 billion dollars, the total regulatory capital reaches the threshold of 200 million dollars, and the number of employees is around 600. Ameriabank is the largest financial institution in Armenia by all major indicators. We are the largest lender in the Armenian economy, having the largest corporate loan portfolio.
During these years, we have directed more than 2 billion dollars to finance various sectors of Armenia's economy, including more than 200 million dollars to export promotion, more than 350 million dollars to lending to small and medium businesses, and the Bank's financial mediation in 2007. from 0.09% in 2014 reached 5.91%.
Ameriabank is the largest taxpayer among Armenian banks, and ranks 15th among the country's largest taxpayers. At the same time, we are one of the most efficient financial institutions, taking leading positions in terms of such indicators as return on capital, profit, revenue per employee, assets per employee, etc.
We managed to achieve all this thanks to a unique philosophy, corporate culture and the spirit of American meritocracy. At the core of this culture are human qualities and people's professionalism, not positions or positions. Our company has a flat management organizational structure, which allows to reduce the number of hierarchical levels. It is a partnership that allows key members of the management staff to acquire a share in the company due to the results of their own work, to increase that share and to influence the results of the company's activities with the quality of their own work. We evaluate all our successes in the context of a long-term perspective. We start and continue the work of life, not just a project that has a beginning and an end. We believe in the potential of our company, the economy and the country where we live and work.
At the beginning of this journey, we looked twenty years ahead and built our strategy based on that. In particular, we made very serious investments in the development of the technological sector (at that time everyone laughed at us), we allocated no less serious funds to the development of the universal bank model. we were developing all directions of our business in an adequate and balanced way. It was not a priority for us to get short-term profit at the moment, but we invested in the development of relations with clients, our staff, our team. All these factors together with our shareholding structure, customer loyalty, choosing the right time for making key decisions led to the fact that we managed to implement our plans and turn the small company into a champion of the local market, one of the largest players in the financial market of the region and the largest player in the financial sector of our country.
Ameriabank has been the leader of the Armenian banking market for three years. After signing the agreements with EBRD and IFC, Ameriabank's capital increases significantly. With all this, what prospects are opened for Ameriabank and maybe for the economy of Armenia in general?
After closing these deals, our capital has effectively doubled, which will allow us to nearly double our assets. New perspectives and unique opportunities are indeed opening before us. As you know, Armenia's GDP has a centralized structure. For example, mining accounts for one third of exports. The minimum amount of credit requested within the framework of one project in this field is 30-50 million dollars, and no Armenian bank was able to serve such applications alone. The bank's expansion opens up new opportunities to enter international capital markets and B2B financing markets. It is also a good opportunity to develop in the conditions of global upheavals, to start new bank transformation projects in difficult times, to support sectors of the economy in need of financial support and prospective players in these sectors. At the same time, along with the growth of the bank, we have access to international best practices, unique software solutions, modern technological products that are used in many countries of the world. The introduction of such solutions and products requires serious investments, and in this respect the size of the bank is of key importance, because the balance sheet of the bank must allow costs comparable to the scale of the business.
What changes are expected in the bank's corporate governance system after EBRD's acquisition of share capital?
Even before signing a deal with the EBRD, we had a goal and ambitious plans to enter the international capital markets, that is, to carry out an IPO (initial public placement), which will probably be the first Armenian IPO in the international arena. In that regard, we started an internal IPO project a few years ago. All the processes and changes taking place in the bank are carried out within the framework of that complex project and with the corresponding logic, which also includes changes in the corporate management system. Our Board of Directors has included an independent director for a long time, there are committees attached to the Board of Directors, and within the framework of corporate changes, we are currently forming three committees attached to the Board of Directors in accordance with the best practices of international capital markets. In this sense, the participation of EBRD and the new level of partnership with IFC make our project even more special. 2016 in the meantime, the Board of Directors of Ameriabank will be supplemented by an independent director who will represent EBRD, and we will continue the global changes of the bank's corporate governance system.
The management of Ameriabank announced that the bank plans to carry out an IPO in 2016, if the state of the global and local economy is stable. Have your plans changed?
We're headed for an IPO. And we have a very good idea of how complex this process is, what kind of internal resources are required. A few years ago, we announced an IPO as a 2014 internal goal for our team, then moved that date to 2016. Now it is obvious to us that in 2018-19 soon it is impossible. Let me explain why. The reason is not only the difficult economic situation in the world, in the region and in our country. There are many other important factors to consider. We have engaged consultants, we are working with large investment banks and we understand that for the IPO to be successful, the placement volume should be at least 80-100 million dollars. The share of the minimum placement volume in the bank's capital cannot exceed 30-40%. Simple calculations show that the bank needs another 150-200 million dollars of capital to ensure this indicator. Taking into account the multipliers affecting the possible price during the placement, the capital of the bank should be 250-300 million dollars in order to successfully carry out an IPO even in the range of 50-80 million dollars. Currently, we are close to the threshold of 200 million dollars and we realize that we are still far from our goal. That's why we intend to conclude merger and acquisition transactions to increase the bank's capital to at least 250-300 million dollars and to carry out a liquid placement of shares in the capital market. These are the internal problems before us. Naturally, the external environment must also be favorable for conducting an IPO.
The IPO is not an end in itself, but a way to attract adequate, fair and fair value resources that will reflect the quality of our assets to ensure the next stages of development. That is why it is necessary to work consistently, ensure intensive and extensive growth and wait for the right moment. I would like to note that investors value not only the size of the bank, but also its profitability, return on capital, quality of the credit portfolio.
What is Ameriabank's future strategy? What growth indicators have you set for yourself?
One of the strategies I have already touched upon is access to international capital markets. And now our task is to grow both organically and non-organically, to grow by ensuring maximum profitability, to increase the rate of return on capital to 20%, to improve the quality of assets, to include all sectors of our economy and to lead the organization in the direction of a universal bank. By the way, we have been implementing the non-organic growth strategy for three years. As you know, we have a successful experience in acquiring the loan portfolio of Cascade Bank, Norvik UAC. We hope that already this year we will be able to apply this experience to other similar projects and increase capital through merger and acquisition transactions.
As for growth benchmarks, twice a year we hold strategic meetings to assess the situation in Armenia and the region, to identify the structure, nature and direction of possible problems, as well as to determine those sectors of the economy that will be least affected by the mentioned processes. Each year we define for ourselves the areas on which we focus our attention. At the moment, it is small and medium business, which also provides an opportunity to diversify certain risks, diversification of cooperation with exporters, and of course, retail banking. For eight years, we have been very actively and successfully developing both the corporate sector, the investment banking sector, and the retail business. However, in terms of existing potential, we are not yet satisfied with the balance in retail activity to truly consider ourselves a universal bank. Although in absolute terms we are one of the largest retail banks in Armenia, in relative terms retail activity is still below 40% of our balance sheet.
Mr. Mkrtchyan, Ameriabank also successfully implements a strategy of social responsibility, actively engages in charity. However, this information can be found on the bank's website by anyone who specifically searches for it.
We take our social responsibilities very seriously, but we don't really like to talk about it...
However, you summarize certain results of seven years of work, and I think that our readers will also be interested in this side of your activity.
Our corporate social responsibility strategy includes various programs. Some of them, for example, refer to art. As you know, we supported the initiative of holding an international jazz festival in Yerevan, for seven years we sponsored the concerts of such musicians in Armenia as Al Gero, George Benson, Nino Katamadze. We support young people in their professional growth, innovation-oriented and various other initiatives.
We also actively finance orphanages and hospitals. For several years in a row, we have been supporting children with serious illnesses by organizing New Year's events, which include our clients, partners and our team. As a rule, the bank doubles the income received from such events and transfers it to a number of foundations in Armenia for the purpose of treating children.
We have an extensive and carefully developed social responsibility program, which we implement and will continue to implement.
Source: news.am