After merger of banks, call liabilities of merged bank will be valid within 1 year, while time deposits will remain valid under contract terms

ArmInfo. After merger of banks, call liabilities of merged bank will be valid within 1 year, while time deposits will remain valid under contract terms, Deputy Chairman of Armenia's Central bank Nerses Yeritsyan announced at December 18 at the Armenian Parliament, when presenting the draft amendments ato the law "On Guarantee of Remuneration of Bank Deposits of Physical Entities".

"In case of bankruptcy of a bank if according to the current law the depositor could receive his/her funds during 1 year, now according to the amended law the return of these funds will be done in 7 days.  Besides, if by the current law the depositor had to manage in one year term to have the deposit recognized valid, now the amended law proscribes 3 year term for this", he explained.

Yeritsyan emphasized that the amendments in this law are aimed at maintaining and raising citizens' trust toward the banks. The MPs, hailing the presented imitative, unanimously agreed that this change is quite appropriate prior to the expected merger of the banks related to the CB banks new requirement for 2017.

A month earlier Chairman of Central Bank Arthur Javadyan announced that 97% of deposits in Armenian banks are guarantied deposits, "For the last 7 years the total amount of deposits in Armenian banks increased 4.3-fold to 1.7 trln AMD, from which 1.1 trln are funds of physical entities", he informed, noting that within the last 10 years the number of depositors increased 6- fold to 1.749 mln.

To recall, on October 26, 2015, Armenian National Assembly approved amendments to the law "On Guarantee of Remuneration of Bank Deposits of Physical Entities", according to which the maximum up of guarantied deposits of physical entities was increased more than 2-fold to 10 mln AMD for drams deposits, and to 5 mln drams for USD deposits.

To note, according to the CB's requirement, starting from 1 Jan 2017, the minimum total capital of Armenian banks is to be no less than 30 bln AMD versus the current 5 bln AMD. The recent news from the merging of banks aimed at capitalization is as follows: BTA Bank merged with Armeconombank, German ProCredit bank merged with INECOBANK. By this consolidation INECOBANK settled the issue with the CBA's new requirement. Meanwhile, Armeconombank still needs increasing its capital to the required level. Another two banks Araratbank and Anelik Bank consider the possibility of increasing their capitals by acquiring another bank. Anelik Bank's capital was several times increased by its owner's direct investments in 2014-2015, but capitalization is still needed for reaching the required level. There are several other banks, which need capitalization to meet the new requirement. None of them has announced about leaving the market yet.