Central Bank of Armenia to have two deputy chairmen

ArmInfo. On November 11, the National Assembly of Armenia introduced amendments in the Law "On Central Bank" in the second and final reading, as well as in a number of related laws, including the ones "On banks and banking", "On credit companies", "On insurance and insurance activities," "On securities market" and "On investment funds."

CBA Chairman Arthur Javadyan stressed the need for a second deputy chairman of the CBA to enhance the efficiency of assessments. He added that the deputy chairman will be appointed by the president and the powers will be distributed between the chairman and the deputy chairmen by the CBA Board that consists of 8 members (5 of them being independent). Javadyan said that his salary is 7 times as low as that of the heads of the Armenian commercial banks and the wages of the CBA employees are by 30% less than those of the commercial banks' employees.  "Moreover, over the past 2-3 years the wages at the CBA have not been increased and no employees have joined the CBA staff this year," he said, noting that the position of the second deputy chairman will need no serious expenditures.  The deputy chairmen will have similar wages (earlier Deputy Chairman of the CBA Nerses Yeritsyan told media that his salary is 1.3 mln AMD).

Javadyan presented one more amendment related to the control over financial organizations. "This is necessary for reducing the risks and enhancing the efficiency of consolidated control by the megaregulator.  Javadyan specified that members of a financial group can be banks, credit companies, investment companies, insurance companies. "The Central Bank has the right to exclude one of the members of the financial group from the capital if that member's participation in the capital creates risks for the entire financial group. The CBA can also suspend the member's rights instead of excluding that member from the capital," he said.

According to the Rankings of banks, credit companies and insurance companies quarterly prepared by the Agency of Rating Marketing Information (ArmInfo), as of 1 October 2015, the aggregate total capital of the banks was 511.3 bln AMD (2.4% y-o-y growth). 5 out of the 21 commercial banks of Armenia meet the new minimum total capital standard to be introduced in 2017. The aggregate total capital of the credit companies was 133.9 bln AMD (34.6% y-o-y growth). The aggregate total capital of the insurance companies was about 16 bln AMD (almost 8% y-o-y decline).  Analysts say that as the CBA's new standard for the minimum total capital of banks (30 bln AMD versus the current 5 bln AMD) comes into effect on 1 Jan 2017, some market participants may merge into financial groups. At the moment, there are 21 commercial banks in Armenia, as well as 31 credit companies, 6 insurance companies, 8 investments funds and 4 managing investment and pension funds.