Armeconombank acquiring BTA Bank (Armenia)

 

The analysts of ArmInfo's Financial Information Service say that the merger of the capitals of BTA Bank (Armenia) and Armeconombank enables the latter to increase the total capital by 5.5 bln AMD to 16.4 bln AMD, but 14 bln AMD is still needed for Armeconombank to meet the new standard (30 bln AMD), which comes into effect in 2017. This merger was preceded by two capitalizations in H1 2015: in March one of the key shareholders - Eduard Sukiasyan - invested 1.2 bln AMD in the capital as a long-term subordinated loan; in mid April the capital was replenished by 3.6 bln AMD by the key shareholders Khachatur and Saribek Sukiasyan. Against this background, another achievement of Armeconombank was the prolongation of the EBRD's 20% stake in the capital for 5 years (versus the previous 25%+1 share). 

 

As of 1 October 2015, the majority shareholders of Armeconombank OJSC are EBRD (20%), Saribek Sukiasyan - 22.6%, Khachatur Sukiasyan (19.5%), Robert Sukiasyan (15.3%) and Eduard Sukiasyan (2.1%). The total number of shareholders of Armeconombank is 1419, including 20 non-residents with a 32.4% stake. There are 1,153 individuals among the shareholders (with a total of 70.66% stake). According to the Financial Rating of Armenian Banks by the Agency of Rating Marketing Information (ArmInfo), the share of the authorized fund in the total capital of the Bank is 21.4%, and the share of accumulated profit - 23%, with the remaining part being reserves. From 1992 to 2011, except for the year 1995, the Bank annually paid dividends, but the amount of the dividends repeatedly declined in the specified period. Since 2012 the shareholders have been spending the profit on the Bank's development. In Jan-Sept 2015, Armeconombank demonstrated profit, which sagged by 38.4% over year.

 

BTA Bank (Armenia) is the subsidiary of Kazakhstan's BTA Bank and has been operating on the Armenian market since 21 June 2005. As of 1 October 2015, the Bank had 5 branches, including 4 in Yerevan. The number of employees was 131. As of 1 Oct 2015, the shareholders of BTA Bank (Armenia) were TuranAlem Bank (Kazakhstan) - 64.9%, ZRL Beteiligungs (Austria) - 31.1%, AMK Invest LLC - 4%. By the Financial Rating, as of 1 Oct 2015, the total capital of the Bank amounted to 5.5 bln AMD. The share of accumulated loss in the total capital was 20% or 1.1 bln AMD, with a 10.2% year-over-year growth.

 

To note, Armeconombank is the former Bank for Construction and Public Housing of Armenian SSR. It was the first bank of that time to be reorganized into a joint stock bank (registered as No1 by the Central 

Bank of Armenia on 26 August 1991) and to receive the status of an open joint stock company. In 1997 the shareholders' capital of Armeconombank radically changed following the involvement of SIL Concern founders - the Sukiasyans' family, and this made it possible to solve the problem of capitalization with a tangible increase of the authorized capital. In 2004 an agreement was signed with the EBRD to involve that institutional investor in the capital and that process was completed in 2005. As a result, the EBRD became the owner of 25%+1 share. As of 1 Oct 2015, the customer base of the Bank has over 130 thsd legal entities and individuals, with the number of employees being 868. The branch network of the bank consisted of 40 branches, including 19 in Yerevan, 20 in the provinces and 1 in the 

NKR. 

 

To recall, the Armenian banks are intensively replenishing their capitals to meet the Armenian Central Bank's new standard, which will come into effect on 1 Jan 2017. According to that standard, the 

minimum total capital of the banks is to be 30 bln AMD (versus the current 5 bln AMD). At the moment there are 21 banks, and most of them will have to increase their capital to 30 bln AMD by 2017. It is 

only the TOP-5 banks whose total capitals exceed 30 bln AMD now.