“We are in the transitional phase now, sometimes we make mistakes and sometimes we learn from the mistakes of others. The Armenian banking system is new and is still very small to play a key role in Armenian economy”, said general director of Conversebank, Smbat Nasibyan during our conversation concerning the Armenian banking system.
Usually specialists say that banking system is like the veins of the economy. From this view, if the Armenian credit capacities cover only 7% of GDP, we may assume that our economy may get a “heart attack” soon. Furthermore, currently there is a high demand for business credits, but banks tend to get more income from consumer credits than from business credits. How can this problem be solved? The Central Bank doesn’t have a right to solve that problem. The CB can’t tell banks what to do. The head of the Russian Banks’ Union, Garegin Tosunyan, told us during our conversation that banks are not to blame, rather the economy because it doesn’t provide banks with long-term resources. In regard to the mentioned problem S. Nasibyan brings up Conversebank, “Our bank gives business credits more”, says the banker. According to him, currently, there are over 4 billion drams worth of business credits in use. The bank makes its calculations based on different fields and their risk level. In Conversebank out-time credits cover 0,5% of the total capacity of credits.
The mortgage credit portfolio of Conversebank is very interesting. Now only few banks give mortgage credits. Most of the mortgage credits in Armenia are given by foreign organizations. Conversebank gives mortgage credits too, but the interest rates they offer are very high for Armenia (13%). This is one of the things that makes Armenian banks vulnerable.
For several years now Conversebank has been considered to be one of the leading banks of Armenia. Does the bank have the same reputation now? “The bank hasn’t violated any norms and its liquidity is very high because it doesn’t have any problems to deal with. Recently, we were ranked best bank in the field of money transfers. We give out several money transfers and the amount of our daily money transfers covers $200-300k USD”, said S. Nasibyan. Nevertheless, according to our information, the CB has recently started checking up on Conversebank more often. It is not clear why the CB is doing this because Mr. Nasibyan says that they don’t violate laws and work in very transparent conditions. In response to our question as to whether the CB wanted to change its approach to some banks, Smbat Nasibyan answered, “Maybe”. Robert Kocharyan met representatives of the CB board in January of this year and told them to let the trade banks do their job so as not to create difficulties.
When speaking about the regulatory role of the CB, we should speak about the CB head’s intention to mention the names of banks violating rules as well. We asked many bankers about this, to which Tigran Sargsyan and many other bankers talked about positively and said that it would increase the level of transparency of banks. S. Nasibyan asked a very interesting question about this: What if banks apply to court against the CB decision? When will they let them know about what they found? Are they going to do that before the court proceedings or after? “As other regulatory bodies, the CB may not be objective either”, said the banker. According to the banker, in order to not harm the reputation of banks, they should define the concrete mechanisms of these proceedings.
As for the other problems of the banking system S. Nasibyan said that those problems had to do with the professionalism of banks and were often discussed during the meetings of the Armenian banks’ union. In fact, the banker agreed with Garegin Tosunyan when he said that the corporative culture of managing banks is not developed in Armenia and, in fact, the union of banks can’t make decisions yet and solve problems directly.