Interview of the member of “Norvik” UCO’s Board Tigran Bostanjian to Mediamax agency and Banks.am portal

- What major problems did “Norvik” UCO encounter in last crisis year and with what indices did you close 2009?

- I think 2009 was the most unfavorable year not only for our organization but for the all financial-credit system of Armenia and most economic entities operating in the county. The main problem “Norvik” encountered was the non-fulfillment of liabilities by the borrowers; there were also facts of non-payment.

To my mind the basic factors of non-fulfillment of credit commitments were the panic moods both among the legal entities and the individuals, when it became almost impossible to forecast own incomes, out of which the credits had to be repaid, and when the risks that the second wave of crisis could raise still existed.

But, despite these problems and due to intensive cooperation with the borrowers (softening of payment conditions, delay of payments by basic sums, re-crediting, etc) we have overcome this period and even in such hard conditions could provide $4.8mln net income, which was certified by the external auditors.

- In the end of 2009 you said that already during the first three months “Norvik” UCO would begin to introduce new products and resume the crediting of the population and the business. What products did you mean and at what stage are your plans today?

- Indeed, we had definite plans as concerning new products. Particularly, we intended to resume population crediting by cards and by a new consumer lending program. But taking into account definite circumstances “Norvik” shareholders decided to postpone these programs and wait and see until the situation with the Armenian dram clarifies. Particularly we are fettered by the possible risks of devaluation of the Armenian dram - we, being a credit organization, cannot accept drams from the population and then issue them as loans.

Our shareholders are not going to take the risk of converting own dollar resources into Armenian drams yet until the national currency becomes more stable at least for 1.5 or 2 two years or until there is a possibility of hedging these resources with local banks, at least during this period.

- At the same time, you have also stated that in 2010 “Norvik” would work with corporate clients as an investment bank. Could you please tell us more about your intentions?

- We have already started works on resuming business crediting and will soon issue the first big business credit this year, which will be followed by others. Besides, we negotiate with local banks and already have concrete arrangements for issuing syndicated credits and financing large-scale projects.

As for the work with the clients as an investment bank, this means our participation in concrete projects both as a co-owner and as a creditor. We are negotiating over this, studying and analyzing relevant projects.

- Is the authorized stock of “Norvik” UCO planned to be replenished this year and is it possible that the company will participate in international loan programs?

- We are not planning it yet. Today the authorized stock of the company makes $3.6mln, the total capital - $14mln, which has formed due to retained income.

As for the participation of “Norvik” UCO in international loan programs I would like to note that we don’t exclude this possibility, but we still study the spheres of these programs from the viewpoint of their criteria and risks.

- At what volume do you intend to bring your credit portfolio this year?

- If everything goes as planned, the volume of the credit portfolio will reach $60-$70mln by the end of 2010.

- Do you plan to become a member of the Association of Credit Organizations of Armenia and how would you comment on Association’s initiative to abolish VAT on services of credit organizations?

- We are intending to become a member of the Association of Credit Organizations of Armenia during this year. As for the initiative to abolish VAT on services and on commission incomes in particular, and to make amendments to the law “On financial Ombudsman”, it is very urgent and timely.

Particularly, I think the proposal to allow the credit organizations having their representative in the Ombudsman’s Council and reducing the rate of annual mandatory payments to the office of financial Ombudsman, which is the most important thing, is reasonable, since the difference between the payments by credit organizations and by the banks is beyond all reasonable ideas. For instance, the leading Armenian banks pay less than some credit organizations to the office of the financial Ombudsman, which cannot be unjustified.

- There are at least 28 credit organizations operating in Armenia today. Is this number justified from your viewpoint and is it possible that they merge in the future? 

- To my mind, this number is justified if all these organizations further the development of our country’s economy. As for the merging of credit organizations in the foreseeable future, this is also possible, since the Central Bank of Armenia plans to toughen and raise the normative for the minimal authorized stock of credit organizations.

- It’s known that you have suspended your plans concerning the transformation into a commercial bank because of ongoing global events. Nevertheless, is this idea still in force?

- The plans to transform “Norvik” UCO into a commercial bank are still suspended until we have the final decision of the shareholders on this.