Armenian commercial banks start showing interest in cooperation with EIAA

ArmInfo. Armenian commercial  banks began to show an increased interest in cooperation with the  Export Insurance Agency of Armenia (EIAA), Executive Director of EIAA  Vazgen Abgaryan told ArmInfo correspondent.

"If earlier we asked banks to consider the possibilities of  partnership with the agency, now the situation has changed in many  respects - the institutional confidence of banks has increased, over  the past year the number of partner banks has increased from 1 to 8,"  Abgaryan said. This trend, according to the head of the state  company, is quite logical, as the banks are motivated by the specific  practice of the EIAA in agreements with other financial structures  and increasing turnover.

First, as Abagaryan explained, the banks that are most active in the  field of trade finance, then the less active players in this market,  join the cooperation. The expert connected the phased connection of  the banking community to cooperation with the EIAA with the natural  desire of the creditors to "hang" 100% of the risks on the Agency.  "Naturally, this is impossible, because any insurance product should  be logical and can not cover those risks that do not come from the  deliberate violation of the export contract," he said.  At the same  time, Abgaryan stressed: "When the real estate market is not so  liquid and forecasts are ambiguous and volatile, the availability of  insurance policy as primary security is growing. And banks began to  understand this".

To note, the "Pre-export financing" service of EIAA was launched in  the Armenian market in the spring of 2016, and involves providing  financing to exporters up to 80% of the value of the volume of  exported products at the production stage, in particular for the  purchase of raw materials and for covering transportation and customs  expenses. EIAA undertakes to cover 95% of the risks of partner banks.   To note, the Insurance Company CJSC "Export Insurance Agency" was  established in late October 2013 by the decision of the Government of  the Republic as an effective tool for export promotion .The main  function of the Agency is insurance of exporters (small and medium  enterprises) that are residents of Armenia from financial risks  (losses) in those cases when the foreign buyer does not fulfill his  obligations under the export contract on the terms of payment for  goods placed in installments. Trade risk, when the buyerrefuses to  pay due to bankruptcy or without legal justification, or political  risk in case of restriction of trade or bank transfers, prohibition  or restriction on currency exchange, as well as natural disasters,  wars and inability to pay due to other political events.