Armenia Economy

Moody's reports: Negative outlook for Armenian banking system

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.

Armenia Environment

Armenian Bloggers initiate boycott of Vneshtorgbank

Armenian bloggers have initiated a boycott of VTB Bank Armenia and are inviting everyone to join the action. Better known as “Savings Bank of the Republic of Armenia” (Armsavingsbank) was founded

in 1923 and was the pillar of Soviet Banking system and law obedient Soviet citizens were encouraged to hold their savings there – which was one of the reasons, why after the collapse of the USSR and downfall of the Soviet Ruble it had huge depts to Armenian citizens. In fact it ows me, personally – about 2000 Soviet Rubles. In Kocharyan era the bank was sold to Armenian oligarch of Karabakh origin – Mika Baghdasaryan for a ridiculously small amount of money, to be soon resold to Russia’s Vneshtorgbank.
The couse of blogger discontent lies in the fact, that as part of it’s bid for acquiring the Azerbaijan’s AF-Bank, VTB have forced their Armenian subsidiary to close down their branch in Nagorno-Karabakh. Clearly – this is politics intruding into business, so bloggers are urging everybody to close their accounts at VTB.
Yet another cause of the action is the fact, that VTB is providing loans to the Armenian Copper Program (ACP), which plans to clear-cut over 1,500 acres of Teghut’s forest in order to establish an
open pit strip mining operation for copper and molybdenum ore.
The bloggers are urging everyone to also write letter to VTB indicating these two as reasons for their frustration with bank’s activities, as well as avoid making utility payments via VTB, which is so far one of the prime choices for making water, electricity and communication services payments in Armenia.
The Armenian Observer blog is joining the action and is urging everyone to do so as well.