AmRating states that the
Armenian banking system is in an intensive development phase and has
drawn a lot of attention from foreign investors. Developed
legislature, strict prudential regulation, increasing competition and
scarcity of resources are conducive to the development of good
corporate governance standards, the accumulation of management
experience, lowering corruption and lower non-financial risks.
Because of the strict prudential monitoring and regulation by the
Central Bank of Armenia, commercial banks are in line with recent
international trends and moving towards Basel II standards. Liquidity
and capital adequacy measures are quite high, and the percentage of
officially overdue loans on the books is insignificant.
“The low
politicization of the Armenian banking system is a positive
development. Its exposure to political risk is minimal, making banks
comparatively immune to potential shifts in the power structure,
lowering the overall country risk,’’- said Executive Director
Emmanuel Mkrtchyan.
Despite the fact that most
of the recent investors in the market for banking services have been
members of the Armenian diaspora (both pre- and post-Soviet waves)
who carry little weight in political circles, new non-resident
institutional investors who may have specific strategic goals are
entering the market.
Interest from foreign
investors in the controlling banks’ stakes raises questions as to
whether Armenia’s banking system will remain “national” in
character or will be controlled by foreign strategic investors.
In order to avoid the
latter under conditions of scarcity of funding resources, the
regulator’s idea of attracting capital by entering DPOs and then
IPOs is gaining momentum.
Analysts at
AmRating/GlobalRating recognise the main development strategies for
the Armenian banking system in general and commercial banks in
particular as:
- Increased
capitalization.
- Solving the problem
of a scarcity of long-term resources.
- Preparation for the
gradual transition towards Basel II principles.
- Expanding the range
of offered services.
- Regional Expansion
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