Wednesday, March 25 2020 13:25
Karine Melikyan

CBA revokes license of Varks AM for failure to comply with capital  requirements

CBA revokes license of Varks AM for failure to comply with capital  requirements

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.

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10 billion

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200 million

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