Wednesday, March 25 2015 20:37
VTB24 Vice President: As Central Bank of Armenia increases minimum total capital requirement, banking system will become sound and stable
ArmInfo. With Armenian Central Bank increasing total capital requirement, the banking system in Armenia will become sound and stable. The statement came from Vsevolod Smakov, the vice president of the VTB24 Bank, a member of VTB Bank (Armenia) Board, in a press conference on March 25.
He said the minimum capital requirement is increased both in Russia and Armenia. In Russia this measure will help reduce the number of doubtful and unsound actors in the banking system. "By increasing the minimal capital requirement, the Central Bank sets an economic barrier to dubious financial operations," Smakov said.
This is how the Armenian Central Bank responds to the growing volatility of the macroeconomic situation, he said. "It is not a secret that the highly capitalized banking system amid uncertain commercial situation enables the Bank to soften the emerging crisis elements in macroeconomics," he said. Smakov pointed out that VTB Groiup welcomes the Central Bank's decision "as it will lead to stability and soundness in the banking system and banking market in the country."
VTB24 Vice President said the capital of VTB Bank (Armenia) exceeds the requirement for Jan 2017. In particular, on Jan 1 2015, the total capital of the bank amounted 44.8 bln drams versus the requirement for 2017 - 30 bln drams. "However, we will be considering an increase in the capital of the bank in Armenia basing on the business indicators of the bank and the business development requirements," Smakov said for conclusion.
To note, starting January 1 2017, a new minimal total capital requirement - 30 billion drams versus current 5 billion drams - will be introduced in the banking system of Armenia. The Central Bank Council made the given amendment to the provision 2 of the Law "On Regulation of the activity of banks and basic economic standards of the banking activity" on 30 December 2014. The amendment will apply to all the participants in the banking system of Armenia. The banks have enough time to meet the new requirements. This tightening will lead to merger of banks and bigger actors will emerge in the banking sector, which, in turn, will ensure a higher quality and more accessible banking services and health- competition. In addition, the banking sector will become more efficient and stable. Favorable environment will be created for introduction of new technologies and products, which will help involving Armenian banks into the international equity market and creating a basis for further enhancement of cooperation. The banks will become more flexible and resistant to economic shocks. This will promote also financial mediation.
According to ArmInfo's Rating of Armenian Banks, VTB Bank (Armenia) occupies the fourth place in the banking system by the total capital that reached 44.8 bln drams in 2014 with a 20.2% year over year growth. The statutory capital of the bank grew 50.3% to 20.9 bln drams (4th place), assets grew 25.6% to 379.6 bln drams (second place), general credit exposures grew 17.3% to 266.7 bln drams (second place), and general obligations grew 26.3% to 334.9 bln drams (second place). He bank received 777 mln drams profits in 2014 versus 5.6 bln drams in 2013. The total capital of the banking system of Armenia for 2014 amounted to 488.7 bln drams, with a 4.2% year over year growth due to the increased statutory capital of 6 banks, including VTB Bank (Armenia). The banking market of Armenia encompasses 21 banks.
VTB Bank Armenia is part of VTB Group (100pct share). It has the country's biggest branch network - 67 branches.
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