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FOREIGN INVESTMENTS IN ARMENIA'S BANKING SYSTEM MAY GROW BY $80 MILLION BY END 2007
ArmInfo
2007-06-18 13:57:00
Total foreign investments in Armenia's banking system may grow by
$70-80 million, specialists of AmRating agency say. The agency is
a member of Global Rating Group. The specialists forecast at least
six significant transactions with foreign investors in Armenia on
establishment of new banks, investments in the existing banks, and
reorganization of universal credit companies into commercial banks.
Thus, Biblos Lebanese bank is expected to enter the Armenian banking
market.
The bank is intensively negotiating with ITB, one of the local
small banks.
AmRating specialists estimate the transaction at $11 million. As of
March 31 2007, ITB occupied the 20th penultimate position in total
capital ($8.4 million) and the last 21st position in assets ($14.4
million). The bank positions itself as universal however its resource
base is not enough diversified and the provision of crediting is
insufficient. It is noteworthy that the Dutch investors, beneficial
owners of ArmPost, took interest in the bank from the point of view
of creating a PostBank on its basis. AmRating experts say that the
Arab bank actively working in Lebanon and Syria and interested in
the telecommunication sphere in Armenia is likely to have offered
ITB shareholders more favorable conditions actually breaking the
contract with the Dutch. Therefore, the experts do not rule out that
the Lebanese are very likely to overpay $2-3 million for an operating
bank not to establish a Greenfield bank.
AmRating specialists believe that on the example of this transaction,
which has not been effected yet but is still very realistic, one can
speak of the reasonable policy of the Central Banks that corrected the
Order N02 in March 2007. As a result, starting from January 1 2009, the
minimal capital of the operating banks must total at least 5 billion
drams instead of the present 2.4 billion drams. This requirement for
new banks is 5 billion drams. Hereby, the CB stimulates acquisition
of Armenian banks by foreign investors as the local banks suffer
difficulties with capitalisation.
Armimpexbank, one of the country's oldest banks, experiences something
similar. It will be announced shortly that a Russian investment
company has acquired the bank. The well-known Russian businessman
Ruben Vardanyan is the owner of the Russian company. AmRating
say the bank can be estimated at $12-13 million i.e. a little
more than its total capital (9.3 million) as it has been just
staying up actually for 5 years by the wish of its owner, British
businessman Vache Manukyan. Specialists say that "Troika-Dialog"
considers Armimpexbank a contingency plan. Earlier, it displayed
interest in Converse Bank. However, Eduardo Eurnekyan, an Argentinean
businessman, the concessionaire of "Zvartnots" airport in Yerevan,
acquired the bank for $45-50 million. Paying such a big amount for
one of the leading Armenian banks did not fit into the business
of the Russian company. Intensifying its activity in Armenia,
"Troika-Dialog" will undoubtedly adhere its traditional investment
and not universal banking especially now when the Central Bank has
assumed the uneasy task of capital market development. This niche in
the Armenian market is represented only by Armswissbank, which will
become the only rival of the new investbank so far. Nevertheless, this
competition will be of conditional nature in mid-term outlook due to
the poorly developed capital market, first of all, and the different
investment interests. The "Battle of Gigants" of banking retail that
intend to enter the Armenian market will become an important event
in the country's banking system. These are Raiffeisenbank Austria and
the international microcrediting bank ProCredit. Both are very strong
in consumer loans and their entry into Armenian market may turn into
a tough competition with the existing banks.
Thus, ACBA Credit Agricole Bank, the natural monopolist in the sphere
of farming economies, will undoubtedly take interest in ProCredit. The
latter is represented in 19 countries and has up-to-date technology of
micro crediting, especially in processing of agricultural products
and small business. ProCredit is well-informed of the Caucasian
business conduct as it has launched rather successful activity in
neighboring Georgia.
To all appearances, Raiffeisenbank Austria resolved to make a right
step - to purchase the whole package of shares of the Areximbank
(Armenia) from the structures of Boris Ivanishvili, a Russian
oligarch. This became possible after the Austrian Raiffeisen group
purchased for $550 mln the shares of the Impexbank, the leader in
the Russian banking retail, belonging to B.Ivanishvili and being the
head company for the Armenian branch, in the beginning of 2007. It
is planned to complete the legal integration of Raiffeisenbank
Austria and Impexbank OJSC by the end of 2007. The conditionally
called "Raiffeisenbank Armenia" will become a direct competitor
of Ardshininvestbank, Armeconombank, and HSBC Bank (Armenia), of
course. At the moment, Areximbank has rather stable positions in the
sphere of not only corporate, but also retail crediting, it is also
the leader in the autocrediting market.
The entry of Gazprombank (which has filed an application for setting up
an Armenian branch) into the Armenian market will become a remarkable
event for development of strategic directions of the Armenian
economy. According to GlobalRating's data, it is one of the largest
Russian banks by all the important directions of banking service
and the authorized bank of the Gazprom OJSC. The Gazprom OJSC is the
key shareholder of the bank and it has an opportunity to completely
control the bank's activity. The bank with its shareholder in the
regime of strategic partnership, however, it develops its activity
in the field of corporate, retail and investment business quite
successfully. Gazprombank will no doubt become a direct competitor of
the VTB-Armenia Bank, which has lately been activating its work in the
sphere of financing strategically important fields of the Armenian
economy, including the energy sector. AmRating analysts consider
Gazprombank's interest in Armenia to be connected with Gazprom OJSC's
energy investment programs worth a total of about $2 bln in Armenia,
and it is natural that a financial structure authorized by Gazprom
and depending on its politically motivied decisions should operate
with these funds in the country.
As for creation of PostBank in Armenia, Dutch investors will probably
have to build a bank from the very beginning, though there are 1-2
banks in the market that can be of some interest. One of the most
probable pretenders is the Prometey bank.
Aspiration for reorganization of the so-called credit companies into
commercial banks may become a remarkable tendency of development of
the financial services market in the country. According to experts,
this is connected with an obvious lack of resource base in the most
successful credit companies, which failed to stand competition with
banks when the retail crediting market started developing. Therefore
the lists of the Armenian commercial banks may shortly be enlarged
with conditional names of and . It is not ruled out that the First
Mortgage Company universal credit organization will be reorganized
into a specialized mortgage bank.
AmRating specialists consider the political stability, high indices
of economic growth, regulator's successful measures for reforming
of the system to be the fundamental factors of considerable increase
of foreign investors' interest in the banking system of Armenia. The
specialists of the agency think that despite the growing competition
in the sphere of highly profitable banking services, the level
of their penetration in the country is still rather weak, and the
need in raising capitalization and the acute shortage of long-term
resources keep the banks in constant search of additional resource
base and strategic investors. , the Executive Director of AmRating,
Emmanuil Lazarian, emphasized in his conversation with ArmInfo
correspondent. According to him, in 2007 the Central Bank of Armenia
will start reaping the fruits of the policy on financial recovery
of the banking system and its transmission to the stage of intensive
development on the basis of the latest international tendecies. This
policy was launched as early as 2000.
ArmInfo
2007-06-18 13:57:00
Total foreign investments in Armenia's banking system may grow by
$70-80 million, specialists of AmRating agency say. The agency is
a member of Global Rating Group. The specialists forecast at least
six significant transactions with foreign investors in Armenia on
establishment of new banks, investments in the existing banks, and
reorganization of universal credit companies into commercial banks.
Thus, Biblos Lebanese bank is expected to enter the Armenian banking
market.
The bank is intensively negotiating with ITB, one of the local
small banks.
AmRating specialists estimate the transaction at $11 million. As of
March 31 2007, ITB occupied the 20th penultimate position in total
capital ($8.4 million) and the last 21st position in assets ($14.4
million). The bank positions itself as universal however its resource
base is not enough diversified and the provision of crediting is
insufficient. It is noteworthy that the Dutch investors, beneficial
owners of ArmPost, took interest in the bank from the point of view
of creating a PostBank on its basis. AmRating experts say that the
Arab bank actively working in Lebanon and Syria and interested in
the telecommunication sphere in Armenia is likely to have offered
ITB shareholders more favorable conditions actually breaking the
contract with the Dutch. Therefore, the experts do not rule out that
the Lebanese are very likely to overpay $2-3 million for an operating
bank not to establish a Greenfield bank.
AmRating specialists believe that on the example of this transaction,
which has not been effected yet but is still very realistic, one can
speak of the reasonable policy of the Central Banks that corrected the
Order N02 in March 2007. As a result, starting from January 1 2009, the
minimal capital of the operating banks must total at least 5 billion
drams instead of the present 2.4 billion drams. This requirement for
new banks is 5 billion drams. Hereby, the CB stimulates acquisition
of Armenian banks by foreign investors as the local banks suffer
difficulties with capitalisation.
Armimpexbank, one of the country's oldest banks, experiences something
similar. It will be announced shortly that a Russian investment
company has acquired the bank. The well-known Russian businessman
Ruben Vardanyan is the owner of the Russian company. AmRating
say the bank can be estimated at $12-13 million i.e. a little
more than its total capital (9.3 million) as it has been just
staying up actually for 5 years by the wish of its owner, British
businessman Vache Manukyan. Specialists say that "Troika-Dialog"
considers Armimpexbank a contingency plan. Earlier, it displayed
interest in Converse Bank. However, Eduardo Eurnekyan, an Argentinean
businessman, the concessionaire of "Zvartnots" airport in Yerevan,
acquired the bank for $45-50 million. Paying such a big amount for
one of the leading Armenian banks did not fit into the business
of the Russian company. Intensifying its activity in Armenia,
"Troika-Dialog" will undoubtedly adhere its traditional investment
and not universal banking especially now when the Central Bank has
assumed the uneasy task of capital market development. This niche in
the Armenian market is represented only by Armswissbank, which will
become the only rival of the new investbank so far. Nevertheless, this
competition will be of conditional nature in mid-term outlook due to
the poorly developed capital market, first of all, and the different
investment interests. The "Battle of Gigants" of banking retail that
intend to enter the Armenian market will become an important event
in the country's banking system. These are Raiffeisenbank Austria and
the international microcrediting bank ProCredit. Both are very strong
in consumer loans and their entry into Armenian market may turn into
a tough competition with the existing banks.
Thus, ACBA Credit Agricole Bank, the natural monopolist in the sphere
of farming economies, will undoubtedly take interest in ProCredit. The
latter is represented in 19 countries and has up-to-date technology of
micro crediting, especially in processing of agricultural products
and small business. ProCredit is well-informed of the Caucasian
business conduct as it has launched rather successful activity in
neighboring Georgia.
To all appearances, Raiffeisenbank Austria resolved to make a right
step - to purchase the whole package of shares of the Areximbank
(Armenia) from the structures of Boris Ivanishvili, a Russian
oligarch. This became possible after the Austrian Raiffeisen group
purchased for $550 mln the shares of the Impexbank, the leader in
the Russian banking retail, belonging to B.Ivanishvili and being the
head company for the Armenian branch, in the beginning of 2007. It
is planned to complete the legal integration of Raiffeisenbank
Austria and Impexbank OJSC by the end of 2007. The conditionally
called "Raiffeisenbank Armenia" will become a direct competitor
of Ardshininvestbank, Armeconombank, and HSBC Bank (Armenia), of
course. At the moment, Areximbank has rather stable positions in the
sphere of not only corporate, but also retail crediting, it is also
the leader in the autocrediting market.
The entry of Gazprombank (which has filed an application for setting up
an Armenian branch) into the Armenian market will become a remarkable
event for development of strategic directions of the Armenian
economy. According to GlobalRating's data, it is one of the largest
Russian banks by all the important directions of banking service
and the authorized bank of the Gazprom OJSC. The Gazprom OJSC is the
key shareholder of the bank and it has an opportunity to completely
control the bank's activity. The bank with its shareholder in the
regime of strategic partnership, however, it develops its activity
in the field of corporate, retail and investment business quite
successfully. Gazprombank will no doubt become a direct competitor of
the VTB-Armenia Bank, which has lately been activating its work in the
sphere of financing strategically important fields of the Armenian
economy, including the energy sector. AmRating analysts consider
Gazprombank's interest in Armenia to be connected with Gazprom OJSC's
energy investment programs worth a total of about $2 bln in Armenia,
and it is natural that a financial structure authorized by Gazprom
and depending on its politically motivied decisions should operate
with these funds in the country.
As for creation of PostBank in Armenia, Dutch investors will probably
have to build a bank from the very beginning, though there are 1-2
banks in the market that can be of some interest. One of the most
probable pretenders is the Prometey bank.
Aspiration for reorganization of the so-called credit companies into
commercial banks may become a remarkable tendency of development of
the financial services market in the country. According to experts,
this is connected with an obvious lack of resource base in the most
successful credit companies, which failed to stand competition with
banks when the retail crediting market started developing. Therefore
the lists of the Armenian commercial banks may shortly be enlarged
with conditional names of and . It is not ruled out that the First
Mortgage Company universal credit organization will be reorganized
into a specialized mortgage bank.
AmRating specialists consider the political stability, high indices
of economic growth, regulator's successful measures for reforming
of the system to be the fundamental factors of considerable increase
of foreign investors' interest in the banking system of Armenia. The
specialists of the agency think that despite the growing competition
in the sphere of highly profitable banking services, the level
of their penetration in the country is still rather weak, and the
need in raising capitalization and the acute shortage of long-term
resources keep the banks in constant search of additional resource
base and strategic investors. , the Executive Director of AmRating,
Emmanuil Lazarian, emphasized in his conversation with ArmInfo
correspondent. According to him, in 2007 the Central Bank of Armenia
will start reaping the fruits of the policy on financial recovery
of the banking system and its transmission to the stage of intensive
development on the basis of the latest international tendecies. This
policy was launched as early as 2000.