YEREVAN, January 12. / ARKA /. Armenia’s Central Bank has decided to raise the minimum amount of commercial banks’ total capital to 30 billion drams from the current 5 billion drams from January 1, 2017.
According to a Central Bank’s press release, the banks established before January 1, 2017 will have to meet the new requirement- that is to have 30 billion drams worth total capital.
According to the press release, the measure is aimed at encouraging mergers and consolidation of banks, which is expected to create a sound competitive environment and make banking services more available.
The regulator said also it expects this measure to increase the flexibility and the ability of the banking system to withstand shocks in different economic situations, and help advance financial intermediation.
The Central Bank said a series of meetings with bank shareholders show that virtually all are ready for raising their capitalization that will make the system more attractive and steady.
The measure was also welcomed by a number of international financial organizations, which are ready to make investments in the Armenian banks.
“The change applies equally to all banks in Armenia. The deadline is enough for all the banks to bring their activities into compliance with the regulatory requirement,” the Central Bank said.
The last time the Central Bank increased the minimum size of total capital from 2.4 billion drams to 5 billion drams was in January 2009.
According to 2014 data, the total capital of only five Armenian banks met and even exceeded the new requirement, while four banks’ capital was below 10 billion drams. There are now 21 commercial banks in Armenia and also the Pan-Armenian bank.-0-
