Thursday, September 30 2010 18:29
Trend of mergers affects the market of credit companies
ArmInfo. The universal credit organizations (UCOs) Washington Capital (specializing in mortgages) and Credit Union are going to merge into a single credit company. Washington Capital UCO told ArmInfo that the name of the new company is not determined yet.
Both UCOs told ArmInfo that the application for merger of the UCOs was approved at yesterday's sitting of the State Commission for Protection of Economic Competition. Now the application is to be considered and approved by the Board of the Central Bank of Armenia (CBA).
To note, the decision on merger of large players of the financial market (credit companies, insurance companies, banks, lombards) should first and foremost be approved by the State Commission for Protection of Economic Competition. The Commission may reject the merger applications only if the merger process violates the rules of competition in the financial market, particularly, if the company created as a result of merger occupies a monopolistic position in the market.
To recall, the CBA is going to toughen the normative requirements to the credit companies, particularly, to increase the size of the authorized capital to 1.5 bln AMD against the current 150 mln AMD. According to experts, the forthcoming toughening will abruptly reduce the number of players in the credit companies market.
According to the Ranking of Credit Companies of Armenia by the Agency of Rating Marketing Information (ArmInfo), as of 1 July 2010 the summary total capital of Washington Capital UCO and Credit Union UCO made up 396 mln AMD, authorized capital amounted to 450 mln AMD, assets made up 2.2 bln AMD, and provision of crediting - 1.9 bln AMD.
To note, Washington Capital was founded in September 2005. The priority direction of the UCO's activity is mortgage crediting. The owner of the company is Serzh Gharibyan, president and owner of two American companies: "Washington Capital" Real Estate Financial Group and "American General Mortgage Corporation". Credit Union UCO entered the market of credit companies in November 2009 and its owners are 3 individuals: 2 residents and 1 non-resident. The company provides wide range of credit products, except mortgages. Thus, the merger of both companies into a single structure will considerably expand the line of credit products due to Washington Capital's experience in mortgage crediting and Credit Union's wide range of the rest of loans, which, in its turn, will allow the merged company to improve its positions in the credit market in the near future.
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