Banking in Armenia - Overview of the Financial System

Armenia has a well-developed banking system that provides a wide range of financial services to its citizens.

The Central Bank of Armenia is the main regulatory body responsible for overseeing the banking sector, ensuring its stability and soundness.

Armenia has a relatively high level of financial inclusion, with a large number of banks operating in the country, offering various banking services to individuals and businesses.

Most banks in Armenia are commercial banks, with a few specialized banks offering specific services such as microfinance and leasing.

Additional reading: Byblos Bank Armenia

In Armenia, the safety of your deposits is guaranteed, thanks to the Deposit Guarantee Fund of Armenia, a non-profit legal entity that automatically protects both Dram and FX deposits in banks operating in the country.

The fund ensures that deposits are protected up to a certain amount, with a maximum guarantee of 16 million Dram for local currency deposits and 7 million Dram for foreign currency deposits.

A unique perspective: Central Bank of Armenia

Deposits in Armenian commercial banks have been growing rapidly, with a 31.21% increase in April 2023 compared to the same month in 2022, according to media reports.

This growth is a testament to the confidence that Armenians have in the banking system, and the Deposit Guarantee Fund plays a crucial role in maintaining that confidence.

Digital banking is on the rise in Armenia, with online and card payments increasing worldwide due to identity verification, digital signature, AI, and digitized governmental resources.

The country has been actively adopting and exploring technologies to enhance customer experience, with banks now offering simple access to digital banking services such as opening a savings account, making a quick transaction, and getting loans without the need to go to a physical bank.

The gross revenues of the banks almost doubled, and the sector's return on equity increased to 28% from an average of 8% over the past decade, mainly due to transactional income like fees and other gains on currency conversion.

Armenian banks regularly launch new features or replace old apps with new ones to offer a better user experience, with improvements in the interface and verification methods.

The number of mobile wallets and payment apps has been growing worldwide, and Armenian banks keep up with the trends, providing customers with simple and secure payment options, including global contactless payment methods like Apple Pay, Google Pay, and Samsung Pay.

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The mortgage market in Armenia is growing rapidly, with the mortgage portfolio of Armenian banks more than doubling over the past four years.

The variety of lending offers and simplification of the formation process have contributed to this growth, making it easier for people to access mortgage loans. This includes programs such as “Accessible Houses for Young Families,” which has been a popular option for many.

Repaying income tax refunds on mortgage interest when buying an apartment in a newly built building is another attractive option, although this program is gradually phasing out in Yerevan to encourage construction in other regions.

The Central Bank of Armenia has been successful in containing inflationary pressures, with inflation in Armenia currently below target mainly due to easing food and transportation prices.

The financial system in Armenia is surprisingly modern and efficient. Armenia has a well-developed banking system with a wide range of services.

Armenia's banking system is regulated by the Central Bank of Armenia, which ensures stability and security in the financial sector.

Armenian banks offer a variety of services, including online banking, mobile banking, and cashless transactions, making it easy to manage finances.

Consider reading: What Is Financial Asset Management Systems

The Central Bank plays a crucial role in regulating the financial system. It's responsible for maintaining the stability of the economy and ensuring that banks operate in a safe and sound manner.

The Central Bank acts as a lender of last resort, providing emergency loans to banks during times of financial stress. This helps prevent bank runs and maintains confidence in the financial system.

In some countries, the Central Bank has the authority to set interest rates, which can influence the overall direction of the economy. A low interest rate can stimulate economic growth, while a high interest rate can help control inflation.

The Central Bank also supervises and regulates banks to ensure they comply with laws and regulations. This helps prevent bank failures and protects consumers' deposits.

Central Banks around the world work together to maintain international financial stability, such as through the Bank for International Settlements (BIS).

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Fitch Ratings’ bank sector outlook for Armenia in 2018 was stable.

The financial system's stability is a key factor in attracting foreign investment and promoting economic growth.

Fitch Ratings’ assessment of the bank sector outlook for Armenia in 2018 remains a relevant indicator of the country's financial health.

This assessment is a crucial consideration for investors and policymakers alike.

Fitch Ratings’ stable outlook for Armenia's bank sector in 2018 suggests a favorable business environment.

A stable financial system is essential for economic development and growth.

For more insights, see: Financial System

Ameriabank, the largest commercial bank in Armenia, has a rich history dating back to 1910 when it was founded as the Yerevan branch of the Caucasus Trade Bank. Today, it has 14 branches and over 695 employees.

Armbusinessbank, on the other hand, has undergone a re-branding in 2023 and is now known as Amio Bank. It was originally founded in 1994 as the legal successor of the "Arminvestbank" operating since 1991.

Here's a list of some notable banks that have been re-branded or have undergone significant changes over the years:

In Armenia, there are currently 18 commercial banks operating. The oldest bank on the list is Ameriabank, which was founded in 1910.

Ameriabank has a significant presence in the country, with 14 branches and over 695 employees. It also has a large asset base, with around 677 million AMD (1.4 million USD) in assets as of December 2017.

The second-oldest bank on the list is ARMECONOMBANK, which was founded in 1991. It has 50 branches and over 872 employees.

Here's a breakdown of the top 5 commercial banks in Armenia:

Some of the commercial banks on the list have undergone rebranding or changes in ownership over the years. For example, Armbusinessbank was rebranded as Amio Bank in 2023, while Byblos Bank Armenia was opened in 2000 as the legal successor of the "International Trade Bank" operating since 1992.

The Union of Banks is an important part of Armenia's financial history. It has had several leaders over the years.

Vladimir Badalyan was the first leader of the Union of Banks, serving from August 2003 to April 2006. His tenure was followed by Artyom Grigoryan, who led the Union from April 2006 to October 2006.

Seyran Sargsyan has had the longest tenure as the leader of the Union of Banks, serving from October 2006 to November 2009 and again from September 2017 to the present.

In the banking sector, mergers and acquisitions have led to significant changes over the years. The Armenian Development Bank, for instance, was merged with Araratbank.

Armenia has seen a number of commercial banks undergo changes, with some being acquired or merged with other institutions.

AreximBank-Gazprombank was acquired by Ardshinbank, marking a notable shift in the banking landscape.

Several banks have undergone mergers, with Cascade Bank being one of them. It was merged with Ameriabank.

BTA Bank was also involved in a merger, this time with ArmEconomBank.

ProCredit Bank, on the other hand, was acquired by Inecobank.

Check this out: List of Banks That Have Merged to Form the State Bank of India

In Armenia, consumer protection in banking is governed by the Central Bank of Armenia, which ensures that banks operate in a transparent and fair manner.

Armenian law requires banks to clearly disclose all fees and charges associated with their services.

The Central Bank of Armenia has implemented measures to prevent unfair banking practices, such as imposing fines on banks that engage in unauthorized debt collection.

Armenian banks are required to have a complaints procedure in place, allowing customers to easily report any issues with their banking services.

The Central Bank of Armenia also provides guidance on consumer rights and obligations in banking, helping customers understand their responsibilities and entitlements.

Banks in Armenia are required to provide customers with a clear explanation of their rights and obligations in the event of a loan or credit agreement.

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