CBA Chairman asks for a second Vice-Chairman for increasing efficiency of evaluations

ArmInfo. The Chairman of Central Bank of Armenia needs second vice for improving the efficiency of assessments. CBA Chairman Arthur Javadyan made such an initiative in the Parliament on November 10, while presenting amendments to the Law on Central Bank and in a number of relevant laws. According to him, the president will appoint the Vice-Chairman, the Board of Central Bank, consisting of eight members, five of whom are independent, will vest the authorities to the Vice-Chairmen and the Chairman of CBA.

Explaining the expected expenditures on the new job pattern, Javadyan noted that his salary is 7 times less than the salary of the CEOs of the Armenian Banks, while the salary of the CBA staff is by 30% less than the salary of the country's banks employees. "Moreover, for the last 2-3 years the salary in CBA has not been increased and during current year there have not been any new staffing positions in the bank's establishment", he added, taking into account that the new staff position of Vice Chairman will not lead to serious expenses.

He presented to the MPs another amendment, related to the establishment of rules regulating financial group activities and control of them, as well as strengthening CBA's control of the financial organizations.  This particularly relates to the control over affiliated companies (for example bank -insurance company or bank-credit company) with the parent bank. This is necessary for reducing risks and improving efficiency of the consolidated control from behalf of the "mega-regulator". A corresponding legislative framework is needed in a form of law, which will set the definition of a financial group and the rules of control over it", Javadyan explained.

He noted that a bank, a credit company, an investment company, an investment fund operator and an insurance company may be members of a financial group. Besides, according to him, prudential regulations, procedures of developing and publishing the financial reports and other financial information, as well as standards required by the CBA are set up for the financial group. "Central bank has right to exclude from the registered capital one of the financial group members if its participation in the capital creates risks for the whole group. Or instead of exclusion CBA may suspend its rights", the Chairman added.

The voting for the presented amendments is scheduled for November 11.  Besides the amendments to the Law "On the Central bank of Armenia", the laws "On Banks and Bank Activities", "On Credit Companies", "On insurance and insuring activities", On Stock Market" and "On Investment Funds" will also be reviewed.

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 relevant decision was taken during the CB Board's meeting on 30 Dec 2014. It was dictated by the need to merge and enlarge the banks, which will enhance the Armenian banking system's efficiency and help the banks to resist various economic shocks. Currently 21 banks, 31 credit companies, 6 insurance companies, 8 investments funds and 4 managed investment and pension funds run in Armenia.