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TRANSFORMATION OF FOREIGN CURRENCY LOANS INTO DRAM LOANS MAY POSE THREAT TO ARMENIA'S BANKING SECTOR - CHZMACHYAN
31.03.2015 16:00
YEREVAN, March 31. /ARKA/. Samvel Chzmachyan, chairman of the Union
of Banks of Armenia, finds it wrong to demand banks to convert the
loans extended in foreign currencies into dram loans, especially by
using administrative levers.
In an interview with Golos Armenii Newspaper, he said that to demand
this means to jeopardize the country's financial and banking sector.
"I would recommend all those who make a habit to come up with populist
initiatives and remarks related to banks and their private business
activities to consider banks not as objects from which it is necessary
to extract something, but as entities that accumulate savings of
dozens and hundreds of thousands individual and corporate clients,
which not only keep the clients' savings, but also multiply them,"
he said in his interview.
Chzmachyan said that the majority of borrowers of foreign currency
loans are not low-income clients, and they took mortgage loans after
the previous crisis in 2008 and 2009, i.e. they have already seen
how the dram plummeted at once, but have decided to run such a risk.
Today only few foreign currency borrowers face real problems amid
devaluation of the national currency, he said, but banks voluntarily
negotiate with them and soften lending terms, if possible, for example,
prolonging repayment terms or transforming the foreign currency loans
into dram loans.
Chzmachyan is convinced that the usage of frontal support mechanisms
by converting foreign currency loans into dram loans at a so-called
preferential rate will lead to the necessity of complete converting
and inflict heavy losses on banks.
"If the government wants to ease the borrowers' burden, it should do
this not at the account of private commercial banks, but by making
subsidies from the government budget," Chzmachyan is quoted by the
newspaper as saying. --0---
http://www.armbanks.am/en/2015/03/31/86110/
31.03.2015 16:00
YEREVAN, March 31. /ARKA/. Samvel Chzmachyan, chairman of the Union
of Banks of Armenia, finds it wrong to demand banks to convert the
loans extended in foreign currencies into dram loans, especially by
using administrative levers.
In an interview with Golos Armenii Newspaper, he said that to demand
this means to jeopardize the country's financial and banking sector.
"I would recommend all those who make a habit to come up with populist
initiatives and remarks related to banks and their private business
activities to consider banks not as objects from which it is necessary
to extract something, but as entities that accumulate savings of
dozens and hundreds of thousands individual and corporate clients,
which not only keep the clients' savings, but also multiply them,"
he said in his interview.
Chzmachyan said that the majority of borrowers of foreign currency
loans are not low-income clients, and they took mortgage loans after
the previous crisis in 2008 and 2009, i.e. they have already seen
how the dram plummeted at once, but have decided to run such a risk.
Today only few foreign currency borrowers face real problems amid
devaluation of the national currency, he said, but banks voluntarily
negotiate with them and soften lending terms, if possible, for example,
prolonging repayment terms or transforming the foreign currency loans
into dram loans.
Chzmachyan is convinced that the usage of frontal support mechanisms
by converting foreign currency loans into dram loans at a so-called
preferential rate will lead to the necessity of complete converting
and inflict heavy losses on banks.
"If the government wants to ease the borrowers' burden, it should do
this not at the account of private commercial banks, but by making
subsidies from the government budget," Chzmachyan is quoted by the
newspaper as saying. --0---
http://www.armbanks.am/en/2015/03/31/86110/