Exclusive interview of the Chairman of “Anelik Bank” Board of Directors Samvel Chzmachyan to Mediamax Agency and Banks.am portal

In a few days, it will be a year since the Lebanese “Credit Bank” entered the capital of “Anelik Bank”. On the eve of the first jubilee of joint operation, Samvel Chzmachyan agreed to answer our questions.

- Why did you choose exactly the Lebanese “Credit Bank”?

- Before the entry of “Credit Bank” in the capital of “Anelik Bank”, we already had foreign investors. From among 4 individual shareholders of the bank, two were citizens of Russia, each owning 25% of the bank’s shares. Thus, the half of the bank shares belonged to non-residents. We work with our Russian colleagues for already 15 years and I am sure that we will remain partners for the rest of our lives.

Concerning the Lebanese “Credit Bank”, today it owns 51% of the bank’s shares. “Credit Bank” is a comparatively young and fast developing bank, which enters the list of 12 best banks of Lebanon. In order to imagine the scales of the Lebanese banking system, one should simply note that as to its assets, it exceeds our banking system almost 30 times, at that having almost the same number of population as Armenia.

Why did we choose exactly this bank? I will say honestly that over the past 2-3 years, we experienced acute necessity in increasing the capital of our bank. We held meetings and consultations with about 15 foreign banks, among which there were French, German, Italian and of course Russian banks. As the only Armenian bank, having a 100% subsidiary in Russia (“Anelik RU”), it was more comfortable for us to carry out negotiations with Russian colleagues.

But we still chose “Credit Bank”, since, in the final end, a bank is a company of people, and Lebanese people, to put it more exact, Lebanese Christians, as to their mentality, are very similar to us, Armenians. And in any life situation, the human factor is above all. This is true for business as well.

- In a few days it will be a year of strategic cooperation with “Credit Bank”. What is your assessment of the results of the first year of joint operation?

- A year is quite a short term for summing up results. This year was a period of so-called “synchronization of watches” and “adaptation” to each other for us, at that it happened in a most difficult period of crisis.

Today, together with “Credit Bank”, we realize quite a demanded program on co-financing big borrowers, using our many years’ work experience with KfW and the European Bank for Reconstruction and Development.

According to normative-legal acts, in effect in the Central Bank of Lebanon, all Lebanese banks, which own a control package of shares of a particular bank on the territory of another state, should provide the regulator with practically all reports of that bank, in our case it is “Anelik Bank”. It turns out that our bank is accountable to the Central Banks of two countries at once – Armenia and Lebanon. In this sense, there are certain difficulties, which we gradually overcome.

Irrefutable is the fact that when in the capital of a bank, in this case it is “Anelik Bank”, they pour capital, which, as to its volumes, exceeds our “pre-Lebanese capital” 2.7 times, this is already a significantly positive factor. In this case, there is the issue of competent and reasonable distribution of those means: I shall note that the larger part of those means was placed in business credits.

Besides, we purchased a big and comfortable building for the head office of the bank in the center of Yerevan. There are repair works in process there today and we hope that by the end of the year we will open the doors of the new building of the bank for our customers.

- “Anelik Bank” (Armenia), “Credit Bank” (Lebanon), “Anelik RU” (Russia): does this list evidence the fact that the bank has ambitions on transforming into a regional financial player?

- I would not like to make loud statements concerning that, at least today, although, such ideas have been voiced during numerous negotiations both before and after the entry of the Lebanese into the list of the bank shareholders. Today, “Credit Bank” is expanding and spreading its activity up to India and China.

At the current stage, the Middle East is their patrimony in the good sense of the word, due to which the prospect, voiced by you, may become quite realistic, at least basing on the capacities of “Anelik” system of money transfers. Today, “Credit Bank” carries out quite serious work on spreading this system into various countries of the Middle East region, at that using both its own capacities and additional levers. Geography of “Anelik” system includes 100 countries, 350 banks, about 60 000 service outlets and 12 more various systems of individual money transfers. 

Good ambitions are always realizable. One only needs to have the striving. Back in 1997, when our assets increased to $1mln, I was thinking about the time when they would make $10mln. If we take into account the fact that today’s size of “Anelik Bank” assets makes about $140mln, the prospect, mentioned above, is quite realistic.

- One of the main negative consequences of the crisis in Armenia was reduction in the volume of transfers. In order to near the pre-crisis indices of money transfers, commercial banks, which maintain systems of international transfers, have taken the path of reducing the volume of commission fee, implementing new marketing tools. What does “Anelik” do in that direction?

- Per se, “Anelik” is one of the first systems of money transfers on the territory of CIS, and our agreements, concluded back then with numerous banks worldwide, were in effect approximately till 2001-2002. Then commission fees for a transfer were completely different: on average - 3-4%. At that time, this was considered an acceptable tariff, especially since many people, while transporting sums across borders lost huge sums because of lack of knowledge or for other reasons.

Today it is very problematic to convince our partner banks of the fact that there is motivated necessity to reduce commission fees. Meanwhile, other systems of transfers, which entered the market after us, concluded agreements already on pragmatic terms, meeting the current realities.

Anyways, taking into account the necessity to keep pace with the time, we set the rate at the volume of 0.5-0.8% in the directions of Moscow-Armenia-Moscow (as well as from Moscow to Kazakhstan, Tajikistan, Georgia, Ukraine, Belarus and vice versa), by using the capacities of our bank in Moscow. By the way, it will be difficult to find such a rate in the world today.

There are many factors influencing the volume of money transfer turnovers, including political ones. Thus, there was a quite serious reduction in turnovers here because of the famous events in Kyrgyzstan. Using the occasion, I will present quite interesting statistics: as to the volume of turnover of “Anelik” system, the first place is occupied by Russia, second – Uzbekistan, third – Tajikistan, fourth – Ukraine, fifth – Georgia, and Armenia is only the sixth. It is pleasing that today “Anelik” positions itself as an international system of money transfers.

- It is a time now, when it is difficult to surprise potential customers of Armenians banks only by new and alternative bank products: quality and competent service in any ways takes the first line among the factors, at that, first of all at the level of the branch network. How do the matters stand in “Anelik Bank”?

- I would very much like to agree to what you said, but, unfortunately, everything is not that simple in our activity. Yes, you are right, for customers, who use retail banking services, it is more reasonable to spend additional one thousand AMD for comfortable and competent service. However, when we speak of large customers, for a certain part of them the prospect of proper service is secondary. They will choose the bank, which provides more profitable crediting terms. 

About 100-150 customers of the country’s banking system, which make “the difference” in our economy, are in a constant search for “their” bank, and it is difficult to call them constant customers of a particular bank.

A priority for us is to combine pleasure with usefulness: proper service and profitable crediting conditions. At that, when saying “proper service”, I mean not only the culture of service and professionalism, but also comfortable conditions of the branch premises. Just a few days ago we purchased a premise in Sevan town to become a bank branch. Its area makes 154 square meters. By the way, this premise will be the smallest one in our branch network.

By no means trying to relieve bank employees of responsibility, nevertheless, I will state that signs of rudeness and “Armenian mentality” in bad sense of the word are there in certain customers today, in the view of which the axiom, according to which the customer is always right, does not always give positive results.

- Recently, Prime Minister Tigran Sargsian stated that the “margin of Armenian commercial banks is very high and occupies one of the first places in the world”. Can you comment on that?

- I agree to Mr. Sargsian, but with one exception. Yes, today the margin of commercial banks of the country is high. The averaged indices of interest rates in the banking system evidence that fact. But if we leave the averaged indices aside, the picture will be somewhat different. In particular, our bank issues quite a few credits to large customers with the interest rates of 12%, 13%, 14%, at that accepting AMD deposits from the population at the interest rate of 12.5%.

At the current stage, we notice a tendency towards credit volume increase, in particular, the same borrowers, who a few years ago registered credits in our bank at the volume of $10 thousand, today take multi-million credits.

Simultaneously, there is also gradual reduction of credit rates, and this, according to my forecasts, will continue in medium-term prospect as well. By the end of the year one can expect reduction of interest rates on average by 2 percentage points. And not in very far past, annual interest rates of banking credits reached up to 50-60%.

- Last week, the parliament approved changes to the law on “Guaranteeing individuals’ bank deposit compensation”. Will this lead to growth of the volumes of attracted deposits?

- Yes, of course, since here we speak of a serious sum already: from now on, the volume of AMD deposit compensation makes 4mln AMD. Double increase of this standard is a significant index for our population, and in USD equivalent this is more than $10 000.

For many years I was a member of the Board of Trustees of the Deposit Guarantee Fund of Armenia and I welcome this decision, hoping that many of our compatriots will take up a civilized way of keeping their savings.

- Do you feel “discomfort” after CB steps on dedollarization of the banking system of Armenia?

- There is certain “discomfort”. However I assess the very policy on combating dollarization as a pragmatic and timely measure. I have always supported legislative solution of the issue on rules for credit issuance in foreign currency. In particular, I have repeatedly suggested USD credits to be issued only if those means were to “operate” beyond the borders of Armenia.

Somewhat deviating from the topic, I shall also note the necessity of approving a law on gradual reduction of cash turnover in Armenia. The smaller the cash turnover in a particular country, the more secure it is from corruption risks.