ArmInfo. Armeconombank has filed an application to the Central Bank of Armenia for implementation of a new issue of shares. The Bank has told ArmInfo that it is envisaged to start the IPO in June. The subscription to the Bank's shares will presumably last till early November. The Bank is going to issue shares in the amount of 5,000,011,400 AMD. The nominal value of each share is 2,500 AMD.
To recall, the Central Bank of Armenia has recently given a preliminary positive conclusion on the merger of Armeconombank and BTA Bank (Armenia). As a result, the regulatory capital of the merged Amerconombank amounted to nearly 26 bln AMD, increasing by over 4 bln AMD at the expense of the transaction. To note, by the Central Bank's decision, by 2017 the minimum total capital standard for the Armenian banks shall be 30 bln AMD.
Chairman of the Board of Armeconombank OJSC Armen Naljyan
has told ArmInfo that at the moment the Bank has a net profit of nearly 200 mln AMD, however, it is for the shareholders to decide what part of this amount will be spent on the capital replenishment and how much
will be provided as dividends.
When speaking of the new issue of shares, Naljyan says that last year's IPO increased the authorized capital of the Bank by 4 bln, considerably raising the number of the Bank's shareholders and that the Bank hopes to replenish its capital by at least 4 bln this year.
"Our key majority shareholders have already expressed willingness to replenish the missing amount if needed," he stresses, noting that the need for further replenishment of the regulatory capital will not hinder the active dividend policy, because Armeconombank is a public bank and conducts a corporate policy. So, it should pay dividends to the shareholders and the amount of the dividends will be determined during the general meetings of the shareholders.
Naljyan noted that the Bank is simultaneously working with a number of European institutional investors. It has held several meetings during the EBRD's recent Annual Meeting in London (EBRD has an 11.05% stake in the Bank - editor's note). "The investors expressed willingness to contribute to development of our bank, adequately assessing the country risk amid the economic crisis the country faces," the banker says. Nevertheless, he recalls Armeconombank's recent loan agreement with SYMBIOTICS SA (Switzerland) and MICRO SMALL & MEDIUM ENTERPRISES BONDS S.A. (Luxembourg). The $10 mln agreement is aimed at supporting SME development and this demonstrates the international actors' confidence in the bank. Naljyan added that the Bank is cooperating with one of the European investment funds, which is now conducting a due diligence with a view to become one of the Bank's majority shareholders.
When asked about new possible participation of the Bank in mergers in the context of consolidation of the Armenian banking system, Naljyan says that the Bank should be extremely careful when participating in possible M&A transactions. "We should be very conservative in this matter. Consolidation is useful but the process itself is dangerous.
I emphasize this because in terms of quality of assets our bank is considered to be one of the best ones and we do not yet see possible options among those who applied to us for due diligence. The modern M&A practice knows a lot of cases, when healthy banks overestimate their capacities and fail to assess the risks correctly, acquiring small banks and then creating big problems for themselves," he says.
Naljyan says that under the crisis conditions Armeconombank's strategy implies a more conservative approach to lending to large borrowers, among which the main loan default is accumulated. "Yet, we will keep providing loans to our well-tried customers and financing SMEs, whose segment is the healthiest, I think," he says.
To note, Armeconombank (former ZhilSotsBank of Armenian SSR) was the first of the state banks to be reorganized into a joint-stock bank with a CB registration dated 26 Aug 1991. The Bank has an OJSC status. In 1997, Armeconombank's stockholder capital radically changed when the founders of SIL Concern (the Sukiasyans family) joined the capital. In 2004, EBRD joined Armeconombank's capital. As of 1 April 2016, the majority shareholders of the Bank are EBRD - 11.05%, Saribek Sukiasyan - 25.9%, Khachatur Sukiasyan - 14.38%, Robert Sukiasyan - 14.97%, Eduard Sukiasyan - 11.18%. The Sukiasyans' family owns a total of 66.43% of the Bank's shares.
According to the Ranking of Armenian Banks by the Agency of Rating Marketing Information (ArmInfo), as of 1 April 2016 the assets of Armeconombank amounted to 108.2 bln AMD (23.8% year-over-year growth), including lending - 60.4 bln AMD (up 20% over year), total obligations - 88.5 bln AMD (up 15.8% over year). The Bank has 40 branches, including 19 in Yerevan, 20 in the provinces of Armenia and 1 in the NKR.