Reuters news agency has published a report, claiming that Iran is seeking to expand its banking foothold in Armenia and thus trying to skirt bank sanctions the Islamic Republic is facing because of its nuclear program.
The fundamental credit outlook for the Armenian financial institutions is negative, reflecting the operating environment’s potential volatility and lingering political tensions, says Moody’s Investors Service in its new Banking System Outlook on Armenia. Moody’s negative outlook for the Armenian banking system expresses the rating agency’s view on the likely future direction of fundamental credit conditions in the industry over the next 12 to 18 months. It does not represent a projection of rating upgrades versus downgrades.
“Given that the Armenian banking sector is still at an early stage of development, its banks have not been exposed to US sub-prime risk, failed western banks or other international risky asset classes and, during 2007 and 2008, were able to weather the international credit crisis relatively unscathed. Nonetheless, local banks remain reliant on international institutional funding to finance domestic lending and, subsequent to the disruption in international credit markets, particularly in Q4 2008, were faced with increasing spreads for whatever little funding they could access,” explains Stathis Kyriakides, a Moody’s Assistant Vice President and author of the report.