It is thought that there is much money in Armenia…
Media Room
Interview with Armenian businessman Aram Grigorian, resident of Moscow and a member of Ameriabank Board of Directors
Armenian businessman Aram Grigorian, a member of Ameriabank Board of Directors, resident of Moscow, is currently in Armenia. In his interview to Capital he drew some parallels between Armenian and Russian banking systems.  
- Mr. Grigorian, what features are specific or common for the Armenian and Russian banking systems, if compared?
- First the competition in Russia is much higher and the number of banks is greater. True, Russia is larger but compared with Armenia the number of banks per population is bigger anyway. Besides, the Russian banks offer wider range of services. Since the Armenian economic territory is small, it is not profitable for the banks to provide the whole range of products. And last, the market there is much more free.
Despite of strict supervision of the Central Bank of Russia the market is very large and the problems of a certain bank do not affect the whole banking system. It is just the opposite in Armenia. If a bank has problems, it may have its impact on all the other banks. That is why the Central Bank of Armenia exercises tougher supervision over the financial system. It has both positive and restrictive influence. Such strictness in Armenia is a necessity to ensure the stability of the whole system.  
- You say that the range of services provided in Russia is wider. What do you mean?
- For example, leasing and factoring services. Much more banks, and not only banks, provide these services in Russia, while in Armenia their number is limited. Ameriabank does offer such products. Another example is credit cards. The credit card terms in Russia are more favorable since the competition is higher than that of Armenia.    
An important factor is also the higher credit rating of Russia compared to Armenia. I mean ratings of such companies as Fitch, Moody’s, S&P. This triggers much lower cost of money in Russia than in Armenia.
- Then how would you explain that the banking system of Russia was struck by the crisis more than Armenian system?
- It is not quite so. I would not agree that the banking system of Russia was struck by the crisis more than Armenian system. The Armenian banking system is under strict supervision so there is low probability that it will incur losses. We should consider both the quantitative indicators and the clientele. 
The general system of Russia was not exposed to any peril. Even at hard times the banks never stopped functioning and financing. A number of banks went down but it’s natural. The USA had more collapsing banks than Russia.
Actually, it is normal in the market economy. One should not be scared. However, measures should be taken to strengthen the whole banking system so that it is not affected by the collapse of a number of banks. There are 1300 banks in Russia and only about ten of them, less than 1 %, went down. In a way, the crash of a number of banks is even positive as the other banks keep the right level of self-assurance.
- The natural pace of lending in Armenia was slowed down due to the recession. What about Russia?
- It is not the same as it was in 2007. However, it is better than it was half a year ago and much better than a year ago.  
- The bank spread in Armenia is rather large. Does it stem from the lack of competition?
- Both the lack of competition and shortage of financial resources. It is thought that there is much money in Armenia but the money is concentrated with the Central Bank and government-related organizations. The private sector has not this advantage. It does not mean that there are some limitations imposed. Just all the lending institutions prefer to lend their money to the government leaving few funds for the private sector.    
- How would you explain Russian banks’ storming into the Armenian market? Is there any competition in this respect?
- I do not think that they are storming into the Armenian market. Surely, there are some investments but the Russian banks are focused on their local problems and do not pay much attention to the cross-border assets. I would be very happy if you were true. Unfortunately it is not so.  
Samvel Avagyan
Updated 25.07.2009, 11:22
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