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ARMENIAN CENTRAL BANK'S REQUIREMENT ABOUT 6-FOLD GROWTH OF THE BANKS' TOTAL CAPITAL IS TOO TOUGH, MP SAYS
by Arthur Yernjakyan
Wednesday, February 4, 15:43
The Armenian Central Bank's requirement about the six- fold growth
of the total capital of the banks will result in enlargement and
monopolization by means of an administrative instrument, not market
mechanisms, Mikayel Melkumyan, Deputy Chairman of the Parliamentary
Commission for Economy, MP from the Prosperous Armenia Party, at
today's press conference in Yerevan.
He said that the CB makes the bank increase their total capital from
the current 5 bln AMD to 30 bln AMD and at the moment only three banks
meet that standard. He did not name the small banks, which may close
or merge with other banks.
The MP said that the CB's requirement is very tough. In developed
European states such as Luxembourg, Germany, Norway or Sweden, where
the GDP income per capita makes up $30-50 thsd, the Regulator's
requirement to the banks is $6-12 mln only, whereas in Armenia it
is $737 mln. "There are 21 banks in Armenia today. Why hasn't the
number risen or dropped over the past 6-7 years? The free market
should determine the number of the banks", he said.
In the meantime, the MP thinks that the CB made that decision to
reduce the risk of non-performing assets on the balance sheets of the
banks. "The CB wants to enlarge the banks to reduce the unattractive
assets in the total capital of the banks and to enhance the efficiency
of their activities", he said.
According to the CB's requirement, starting 1 Jan 2017 the minimum
total capital of Armenia's commercial banks should grow to 30 bln
AMD versus the current 5 bln AMD. Such a decision was taken at the
CB Board's session on 30 Dec 2014. The amendment is dictated by the
need to merge and enlarge the banks to enhance the Armenian banking
system's efficiency and to resist various economic shocks.
To note, at the moment there are 21 banks in Armenia and the aggregate
total capital of the banking system amounted to $1.029 bln at the
yearend of 2014. The commercial banks' profit has dropped by 35%
over year and totaled $57.2 mln.
http://www.arminfo.am/index.cfm?objectid=703A3AE0-AC6B-11E4-BE350EB7C0D21663
by Arthur Yernjakyan
Wednesday, February 4, 15:43
The Armenian Central Bank's requirement about the six- fold growth
of the total capital of the banks will result in enlargement and
monopolization by means of an administrative instrument, not market
mechanisms, Mikayel Melkumyan, Deputy Chairman of the Parliamentary
Commission for Economy, MP from the Prosperous Armenia Party, at
today's press conference in Yerevan.
He said that the CB makes the bank increase their total capital from
the current 5 bln AMD to 30 bln AMD and at the moment only three banks
meet that standard. He did not name the small banks, which may close
or merge with other banks.
The MP said that the CB's requirement is very tough. In developed
European states such as Luxembourg, Germany, Norway or Sweden, where
the GDP income per capita makes up $30-50 thsd, the Regulator's
requirement to the banks is $6-12 mln only, whereas in Armenia it
is $737 mln. "There are 21 banks in Armenia today. Why hasn't the
number risen or dropped over the past 6-7 years? The free market
should determine the number of the banks", he said.
In the meantime, the MP thinks that the CB made that decision to
reduce the risk of non-performing assets on the balance sheets of the
banks. "The CB wants to enlarge the banks to reduce the unattractive
assets in the total capital of the banks and to enhance the efficiency
of their activities", he said.
According to the CB's requirement, starting 1 Jan 2017 the minimum
total capital of Armenia's commercial banks should grow to 30 bln
AMD versus the current 5 bln AMD. Such a decision was taken at the
CB Board's session on 30 Dec 2014. The amendment is dictated by the
need to merge and enlarge the banks to enhance the Armenian banking
system's efficiency and to resist various economic shocks.
To note, at the moment there are 21 banks in Armenia and the aggregate
total capital of the banking system amounted to $1.029 bln at the
yearend of 2014. The commercial banks' profit has dropped by 35%
over year and totaled $57.2 mln.
http://www.arminfo.am/index.cfm?objectid=703A3AE0-AC6B-11E4-BE350EB7C0D21663