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Central Bank Of Armenia Responds To Criticism Of Those Against Tough

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  • Central Bank Of Armenia Responds To Criticism Of Those Against Tough

    CENTRAL BANK OF ARMENIA RESPONDS TO CRITICISM OF THOSE AGAINST TOUGHENING OF THE CBA'S NEW REQUIREMENT TO COMMERCIAL BANKS' MINIMUM TOTAL CAPITAL

    by Vahagn Mamyan

    Saturday, February 28, 00:17

    The opponents having no sufficient information about the Armenian
    Central Bank's decision to increase the commercial banks' minimum total
    capital standard from the current 5 bln AMD to 30 bln AMD by 2017 have
    recently been voicing generalized statements and comments on it. The
    CB press service has told ArmInfo that in some cases the comments of
    the opponents, who intentionally manipulate the situation, ungroundedly
    whip up the citizens' concerns. The CB thinks that manipulation on the
    banks' names allegedly for their own safety is especially inadmissible.

    The CB believes that the tangible growth in the specified standard
    is aimed at maintaining the Armenian banking system's reliability,
    ensuring stability in the banking sector and deepening financial
    mediation. The source points out that the given measure does not at
    all aim to close some banks or reduce the number of the banks.

    Before taking the relevant decision, the Central Bank had repeatedly
    discussed that issue with the shareholders and heads of the commercial
    banks, which expressed readiness to meet the new requirement. Several
    banks have already replenished their capitals, increasing them to
    the standard level of 2017.

    Not a single bank in Armenia causes the Central Bank's concerns about
    possible failure to meet the new requirement. "The banking system
    of Armenia is stable and meets all international standards. So, the
    customers of the banks have nothing to worry about. Only enhancement
    of the service quality should be in the focus of their expectations",
    says the source.

    To note, starting January 1 2017, a new standard of minimal total
    capital - 30 billion drams versus current 5 billion drams - will be
    introduced in the banking system of Armenia. The Central Bank Council
    made the given amendment to the provision 2 of the Law "On Regulation
    of the activity of banks and basic economic standards of the banking
    activity" on 30 December 2014. The amendment will apply to all the
    participants in the banking system of Armenia. The banks have enough
    time to meet the new requirements. This tightening will lead to merger
    of banks and bigger actors will emerge in the banking sector, which,
    in turn, will ensure a higher quality and more accessible banking
    services and health- competition. In addition, the banking sector
    will become more efficient and stable. Favorable environment will be
    created for introduction of new technologies and products, which will
    help involving Armenian banks into the international equity market
    and creating a basis for further enhancement of cooperation. The banks
    will become more flexible and resistant to economic shocks. This will
    promote also financial mediation.

    http://www.arminfo.am/index.cfm?objectid=04A08BF0-BEC6-11E4-B48C0EB7C0D21663

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