ArmInfo.The Central Bank of Armenia revoked the license of the Universal Credit Company "VARX AM" ("VARKS AM" UKK) for failure to comply with the minimum capital requirement.
This decision was adopted by the CB Board on March 24 this year. The message of the Central Bank explains that the credit company provides loans at the expense of funds raised from shareholders, and does not have the right to attract deposits from individuals (unlike banks - approx. Ed.). During the supervision, the Central Bank found out that in the financial reports submitted to the Central Bank of CJSC UKK Varks Ey EM for December 2019 and January 2020, false data on the total capital indicator were reflected. To find out detailed information, the Central Bank Department for Supervision of Credit Organizations demanded that additional and detailed information be provided. After examining and comprehensively analyzing the provided additional data package and assessing the risks of the organization, the Central Bank found out that Varks Ey EM CJSC did not comply with the minimum total capital requirement, thereby violating the requirements of the RA Law on Credit Organizations (clauses b and "e" of the 18th article of this law).
Considering the foregoing, the protocol of February 25 this year in relation to CJSC UKK Varks Ey EM, administrative proceedings on the application of sanctions have been launched. In the framework of the specified production 03/18/2020 and on March 20, 2020, the Central Bank of Armenia organized hearings on administrative proceedings with the participation of a representative of a credit organization, which gave explanations, which the CB Board considered unsatisfactory.
After recognition of the license of this credit organization as invalid, in accordance with the procedure established by law, a liquidation commission will be formed to carry out the prescribed actions. It should be noted that "VARKS AM" UKK CJSC ("VARKS AM" UKK) CJSC has been functioning in the Armenian financial market since December 20, 2016. The sole shareholder of this company is Finko Invest LLC.
According to the ranking of credit companies in Armenia as of December 31, 2019, prepared by ArmInfo IC, the total capital of Varks Ey EM CJSC amounted to 2.6 billion drams, which is not proportional to what the regulatory total capital, according to published financial reports, amounted to 8.977 billion drams as of December 31, 2019, and this company never published data on the capital adequacy ratio at all. According to the regulatory requirements of the Central Bank for universal credit companies, the minimum amount of total capital is provided for 150 million drams, and the minimum level of capital adequacy is 10%. Assets of "Varks Ey EM" UK as of this date amounted to 23.9 billion drams, credit investments - 18.95 billion drams or 79.3% of assets. Varks Ey EM completed the year 2019 with a profit of 3.95 billion drams.
As of this date, the liabilities of Varx Ey EMC accounted for 21.3 billion drams, of which 72.1% are borrowings from the money market, 8.3% are loans / credits from banks and other financial organizations, 11.9% are liabilities to government, and 7.8% are other obligations.