YEREVAN, July 1. /ARKA/. Armenia’s banking system is very stable, yet banks are influenced by the slowdown in the regional economy, IMF Director of Middle East and Central Asia Masood Ahmed said.
In particular, some banks see the percentage of their non-performing loans grow and record a high dollarization level in deposits, which indicates that rate fluctuations may influence banks, Ahmed told reporters on Tuesday.
In this respect, the decision of the Central Bank of Armenia to raise the minimum total capital requirement for commercial banks is quite reasonable, he said.
According to Ahmed, this decision may lead to banks’ consolidation in future.
“We see no problem in it. If more consolidated, Armenia’s banking sector will become more stable and competitive,” Ahmed said.
In order to enhance effectiveness and stability of banks, the central bank decided to raise the minimum total capital requirement for commercial banks from 5 billion up to 30 billion drams as from January 1, 2017. As of today only five out of 21 commercial banks in the country comply with or even exceed this requirement of the regulatory body. Some analysts believe that number of banks may reduce to 14-15 as a result of this decision.
There are currently 21 commercial banks operating in Armenia. According to the central bank, aggregate total assets of the banks amounted to 3,304.7 billion drams as of June 1, 2015 (3.1% decrease). Total liabilities were 2,835 billion drams (4% reduction), capital was 469.6 billion drams (0.1% increase).
The percentage of non-performing loans rose by 0.8 percentage points to 9.1% in April. ($1-472.53drams). –0–
