Interview of the Executive Director of ARARATBANK Ashot Osipian to Mediamax News Agency and Banks.am web-portal

- Why was it necessity to carry out a restyling of ARARATBANK, what work had been done and what results do you hope to achieve?

- The present speeds of growth give grounds to consider ARARATBANK one of the most dynamically developing banks in Armenia. The branch network, the variety and the quality of banking services extend continually, the volumes of crediting of the real sector of economy increase. Today, the bank occupies a special position in the market of mortgage and consumer crediting, the securities market, as well as concerning the deposit policy, held by the bank.

ARARATBANK extends and develops partner relations with large foreign banks and international financial structures, participates in large international credit programs.

All this made it necessary for ARARATBANK to appear in a new style and with a new advertisement policy. We had been preparing for half a year, and the work in the given direction stirred up in the course of the last three months. There was a special working group set up in the bank, the suggestions of which were discussed in detail by the Executive Body and the Board of the bank. It was important for us for the graphical symbol and the colors to have meaning and secure a resonance from the part of our customers and investors.

The new logotype of the bank, which depicts two acute peaks, directed upwards, which symbolize the name of the bank, but also today’s dynamics of development, as well as all those actions, which will secure the further development of the bank in the course of the nearest years. The new colors - vinous and silver, symbolize professionalism, aggressiveness with elements of certain conservatism and nobility.

Of course, the restyling demanded some expenditure, but we consider the given program a necessary measure for increasing the image of the bank, which will certainly lead to the increase of effectiveness of our activities.

- Does the process of restyling also imply a change in the advertisement policy of the bank?

- Certainly, there are new advertising products and PR-actions elaborated already. This is a continuous process, during which we will use the international experience, adapting it to our reality. We also plan to implement new elements of advertisement policy.

-Recently, you stated that ARARATBANK aims at occupying “a leading position” in the banking system and the financial market of Armenia. What are the components of this notion?

- First of all, we are talking about the increase of the bank’s specific weight in the financial market as of all the types of services. Already today, the bank has serious interbank indices as of the volume of currency exchange – about 12-14%. We carry out consistent work in the direction of other banking services as well; we understand clearly due to which techniques it is possible to become a bank, which dictates the policy in the financial market of the country.

All our proposals in the market are conditioned by the necessity to have our own army of customers, teach them to be loyal towards the bank and, naturally, continually increase their number. In view of this, we concentrate our attention on implementing new services and banking products, which contain the element of social responsibility.

In particular, the bank has elaborated a new type of deposit – “Pension deposit”, which gives the opportunity to open pension accounts in the bank. At that, there is an opportunity provided for registering both institutional (signing agreements with organizations for opening pension accounts for their employees), and individual pension deposits. The mortgage credit on auspicious terms for newly married couples also belongs to the list of the bank’s new products, which are socially oriented.

We offer our customers non-traditional banking services as well, including a mortgage deposit (combines two processes – accumulation of money and the further purchase of real estate on more auspicious terms); the season car credit “4x4” for purchasing all-wheel drive cars in the fall-winter period; credit for repair of cars, damaged in a crash.

- At what stage is the preparation for holding an IPO of ARARATBANK and when will the placement of shares take place?

- We are already concluding the work on the design of the placement. In this case saying “design”, I mean all the conditions of placement – the mechanism, the terms and the cost. Both the cost of the placement /we plan to place the shares at market price/ and the mechanism of placement – for the first time we plan to use a mechanism of direct public offering – DPO, will be new for the financial market of Armenia.

This is why our bank was transformed into an Open Joint Stock Company. Besides, the nominal value of the shares was decreased from 500 to 5 thousand drams. This means that we want to make our shares available and attractive for wide layers of the society. Following the results of preliminary research, one can state that already today there is an interest for the shares of ARARATBANK.

The process of placement of shares will start in November and will last until December of 2007. I want to single out two main tasks, which we will face in the process of carrying out the DPA, – the increase of the shares’ exchange value and the payment of dividends.

In the process of preparing for the DPO, we examined the international experience, which we are going to use, taking into consideration the present trends of development of the Armenian financial market. We already have experience in the capital market–we issued bonds in May of 2007, which became so attractive for the investors that the demand for them exceeded the supply. We plan to carry out a new placement of bonds, and we are considering the conditions already today.

- In the conditions of growing competition, the banks of Armenia started paying great attention to the importance of implementing new technologies. Aren’t those innovations premature, meaning that the population of the country does not yet have sufficient skills for their practical application?

- When in late 90s, ArCa processing center was established in Armenia, many people did not believe that the undertaking would be a success. Today, it is impossible to image our life without plastic cards. There are over 120 thousand owners of plastic cards registered in the country, and the number continually grows.

I believe that it is time for new technologies, and the banks, which are able to implement and correctly present them to the population in time, will be in a winning position.

- Do you plan to undertake the extension of the branch network of ARARATBANK by the end of the current year? What is your assessment of the work of the specialized “Western Union” branch, opened by your bank?

- Positioning ourselves as a retail bank, we attach special importance to the extension of our branch network. The bank has 8 branches, the last one of which was opened recently in Tsakhkadzor. By the end of the year, we plan to open two more branches in Davidashen and in Echmiadzin town. The policy of extension of the branch network will continue in 2008 as well.

What concerns the specialized branch – the “Western Union” department, it is developing. As compared to the beginning of the year, the volume of the operation of the given branch has increased approximately for 4 times.

Taking into consideration such speeds of growth, in September, ARARATBANK became the agent of Western Union, which gives us the opportunity to not only provide the services of Western Union in Armenia, but also have subagents.

Just as it was planned, the branch has already started working by an 11-hour schedule, and in the nearest future, it will start working in 24-hour mode.

- In September, it was announced that ARARATBANK was actively extending the contacts with international financial structures. Which are those structures, and what joint programs are you planning to realize?

- Lately, our relations with correspondent-banks, enjoying international acknowledgement, have stirred up and extended. We held successful negotiations, touching upon the sphere of service and the prospect of trade financing.

We also hold talks with international financial organizations, on the results of which we will inform the public in the nearest future.

- The representatives of commercial banks in their public statements welcome the entry of new banks in the Armenian market. How sincere are such statements?

- Being a citizen of Armenia, I am very happy that internationally recognized banks arrive in our country, which, of course, will lead to the increase of competition, and, as a final result, will benefit the customer.

As a Head of a bank, I cannot avoid thinking about how the given competition will go on. I will not try to hide that it will be difficult to compete with foreign banks, which have the opportunity to attract large financial flows to Armenia. However, the situation in the market gradually changes, and the Armenian banks get such an opportunity as well. What concerns our bank; we will also try to find a partner in the international market to attract financial means.

However, our main advantage will be the fact that we better understand the Armenian market and have sufficient work experience in Armenia.