Interview of the Chairman of the Union of Banks of Armenia (UBA), General Director of “Byblos Bank Armenia” Ararat Ghukasyan to Mediamax Agency and Banks.am portal

- What kind of a year was 2010 for the banking system of Armenia and what are the expectations for 2011?

- If the year of 2009 proceeded for the banking system in an atmosphere of uncertainty, the year of 2010 can confidently be named a year of stabilization, growth and strong competition.
Despite losses in agriculture, banks, nevertheless, managed to expand the volumes of crediting and services.
Following the results of 10 months of 2010, correlation of aggregate credit portfolio of the banking system to Armenia’s GDP made 28%; there is also growth in liabilities. Quite significant was also the growth on assets (45%); a few banks replenished their capital, the process of attracting loans from international financial structures continued.

- To what degree did the high inflation environment become an obstacle for banks?

- First of all, it hinders crediting of individuals, since high inflation and expectations at the currency market hold citizens back from getting credits on the one hand, and on the other - they held banks back from issuing those credits, taking into account the strong influence of currency fluctuations on the solvency of borrowers. 
I believe that I will share the opinion of the majority of my colleagues if I say that the year of 2011 will be much more stable in terms of inflation, and the current interval will be preserved in the currency market.

- Overcoming obstacles, arising during alienation of pawned real estate and introduction of movable property cadastre, are the central issues, voiced by UBA recently. Did these issues find their solution?

- We studied these issues and presented our suggestions to the corresponding structures. According to the information we have, an electronic system of the right to sell the pawned movable property and real estate will be established in Armenia. Introduction of this system will first of all contribute to growth of small and medium enterprise crediting, since often the only property of the latter is cars, production lines and the product and raw material remainder.
We want this system to be introduced as soon as possible and I believe that banks are ready to render financial assistance for its implementation. By the way, for additional financing, we turned to international structures as well.

- What tasks are on the agenda of UBA? We know that the Union has been considering the legislative field of commercial arbitration since last year in order to set up the corresponding structure. What continuation did this initiative have?

- Commercial arbitration was established in summer, 2010, and has been functioning under the Union of Banks. They already consider the first cases and one can state that commercial arbitration is an already established structure. I believe that it will play a significant role in solving disputers between banks and customers.
Despite the fact that arbitration functions under UBA, it is not dependent on the Union or on its Chairman, since one can succeed here only due to independent and impartial arbitration.
In the course of a year we have prepared also suggestions concerning changes in the law on “Bankruptcy”, which aims at ruling out cases of false self-bankruptcy. This practice has negative influence on economy development. The changes suggested by us are still in the process of discussion.

- According to the Chairman of “Byblos Bank Armenia” Board Francois Bassil, since next year the bank will function in accordance with a new more aggressive strategy. What tasks are set for you and how is the bank going to position itself in the Armenian market?

- Byblos Banking Group has rich experience of work in 12 countries with different levels of economic development: from Africa to the United Kingdom, France and Belgium. First of all, we should try to localize the tools and services, which the Group already possesses, in Armenia.
Touching upon the statement of the Chairman of the bank’s Board, according to which the year of 2011 will be a real start of the bank’s activity in Armenia, I want to note that any large foreign investor, and especially in the financial market, needs time to understand the peculiarities of a particular country.
First of all, we will focus on servicing companies, which function in other countries of Byblos Group’s presence as well, or ones that cooperate with economic entities from those countries. Of great interest for us is the production sector, especially companies, aimed at export growth or import substitution.
Today I can state with confidence that “Byblos Bank Armenia” possesses sufficient financing in order to solve the tasks, set for us: we can attract as much as necessary from our shareholders. The bank already provides companies credits at attractive interest rates, starting from 10% annual. In 2011, we plan to increase the credit portfolio at least by 60%.

- Since 2011, introduction of voluntary accumulative component of the pension system is expected to take place in Armenia. How do banks prepare for that?

- We discussed this issue with colleagues a few times and I am sure that all banks do their “homework” concerning this. Each bank intends to approach this issue in their own way and I believe that they will make interesting offers. As a result of reforms, long money will appear in Armenia and its importance has been stated repeatedly. I am sure that the accumulated sums will be directed at crediting economy and increasing competitiveness of our country.