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CAFESJIAN SAID: "HERE IS THE MONEY - GO AND MAKE BUSINESS"
Tell us about the structure of the holding, please, and what is its main mission? The holding has a very simple structure - Cascade Bank, the insurance company Cascade Insurance and Re-insurance and the non-banking credit organization Cascade-credit are owned by the holding. The investment company Cascade-investment is not directly in the structure of the holding, but it reports through Cascade-Capital to Cafesjian Foundation, which, in its turn, is the investor for all these companies. The main ideal of the holding is that we offer a wide set of financial products to clients. I'd like to mention this grew from an original USAID idea of the hypermarket, built on financial technologies and know-how. It was necessary to establish a financial structure in Armenia, which could offer services to the population and investors, for the first time. For example, in the West if you enter any private bank, then you may reach any mutually acceptable agreement. You may receive services on corporate management of your property, or receive funds for purchase of production line. If you are an exporter, you may draw a letter of credit, in other words, everything under one roof. For instance, in the Armenian market there is the problem to receive a credit to buy a car. You will waste much time for it. You will be required to buy insurance, to present guarantees, references. Why shouldn't you go to the bank, which provides the whole service under the same roof? And if you have any credit history, then don't doubt, this deal will be completed quickly and effectively. We are not the first to have the idea of the hypermarket. However we are the first to achieve it. Simply we reached it in complex, at the same time starting creation of all the structures, by the way, what is very important - all they are equal in rights. We don't think, for example, the bank is more important. All work in one direction, to a common goal and aim, based on the principle of client service. I think we succeeded to solve two very important problems - to attract high-skilled personnel and reach high management level. We do not want to be only creditors or advisors, we, first of all, are business partners. The partner must be flexible and not think about earning more money at the expense of a client. It seems that the simple for western countries and some difficult for Armenia structure of the holding is intended mainly for VIP-clients. It is not so. Our public mission is formation and strengthening of the average section of the population, representatives of small and middle-sized business. We are for those, who create and expand their business. Our potential client begins from owner of hairdresser's or stomatologic office, farmer, small atelier and ends with large importer or manufacturer-exporter. The main problem is that now many banks in Armenia do not estimate duly the risks. This is the main factor of criticism concerning creditors. They do not put themselves in the place of a borrower. In many cases, if I decide to take a credit worth $US10,000 dollars, then they make me leave a pledge which exceeds the size of the credit as minimum two times. Then why should I take this credit at all? In order not to do that, it is necessary to properly assess risks to view a client as a partner, to believe him if there are grounds. The example of it, which was not done earlier, and is now done - it is financing of receivables. For instance, a client is waiting for payment for the goods supplies, there are problems with currency cash, but it is necessary to modernize the production, to buy a new production line. In this case, it is necessary to go to help him, not to lay strict terms, not to make a client inoperative. We have decided that we shall not aspire to give credits under big percentage, to become rich through crediting. All must be within the borders of logic, on the basis of professional and balanced approach. All we say about is factoring, financing of receivables and so on - of course, it is not our invention. There are several financial groups in Armenia, who set themselves these tasks. We try to work in close partnership. I think in several cases you run in advance of the market. I mean the mission of the Cascade investment. Not having investment instruments in the market except state securities, you offer the market very advanced scheme of investments, including annuity as provision of pension. I think it is impossible to keep and multiply the funds of clients, investing them in the low-profitable market of State Treasury Bills. There is no guarantee that the inflation will "eat" them and you will lose. I understand you, but somebody must start working, some one must introduce new instrument, mustn't he? As I know a bank is going to issue its bonds. If you are a clever man, you may make a deposit in the bank, and there is no need to appeal to middlemen. But when alternative financial instruments appear, then you apply to professional middlemen for assistance. Our company Cascade-investment is such a middleman. Licensed brokers-dealers work there that give advice on a wide spectrum of investments - where, in what instruments, in order to receive income, for it was reliable. One may leave a part of funds in the country, and another part to invest in foreign countries. Keeping you informed, our brokers will manage your funds easily. "Cascade-investment" can lead you to the New York stock market. We have already opened an account through our partner - broker on the New York stock exchange. There are two principal directions of activities of the Cascade Investment. So, Cascade-credit is starting issue of bonds that are partially guaranteed by the U.S. Government through the Development Credit Authority Program (DCA). These will be rather "strong" securities. Cascade-credit issues these securities, and the Cascade-investment may include them in the list of its instruments. Members of the holding will support and complement each other as far as possible. Besides, Cascade-bank will provide mortgage credits. If you are a conservative creditor, then the mortgage credits are very profitable, because you form a guaranteed portfolio for you for 15-20 years, which will allow further to issue mortgage bonds guaranteed by property. In short, as you see we have not been sitting around twiddling our thumbs and we are preparing a broad field of services with large set and potentialities of investment. We are realists. After two years when you come to Cascade investment and ask to invest your funds, we will offer a large spectrum of instruments, not differing from that people use in developed countries. Moreover, you will be offered balanced decisions. Is there demand for annuity? The annuity of Cascade investment aroused a big interest. And that is the first instrument, which works on western standards. Already several large organizations have expressed interest in provision of savings of their employees through the principle of the annuity. As I know Cascade insurance and - re-insurance is one of not many companies, who have got a license for life insurance. Is it necessary? Yes, our insurance company has got a license for life insurance. Our specialist is in Munich now, where he is passing a probation period in the company "Munich Reinsurance", which is our main re-insurer in the sphere of life insurance. It is the most authoritative and largest reinsurance company in the world. Our partner estimates the potentialities of the Armenian market with optimism and draws much attention to it. We are now seriously working over elaboration of a concept of life insurance of clients, who apply to Cascade-investment for annuity. Here we are pioneers, as because of the absence of non-state provision of pension there was no need in this issue. The life insurance may be widely applied also when giving long-term mortgage credits. We not only insure ourselves thus, but also the borrower and his assignees, dependents and members of the family. If the banking legislation is developed well, then in other financial sectors matters are not perfect, though the USAID had wasted large amounts for the development of the market of capital in Armenia. I think the effect proved to be minimal, if not to account the fact that due these programs a group of theoretically prepared specialists appeared in the country. As I saw, a part of them is working at Cascade-capital today. However, in practice the capital market in the country did not work. Why, what do you suppose? I can explain why these international programs were implemented not so successfully. They began from rendering financial and technical assistance to state regulatory bodies and establishment of infrastructures, and then were suspended, as there is nowhere to go further, if there are not market investors. These programs were not designed for creation of the market of capital or to make concrete investments. Gerard L. Cafesjian, believed in the possibility of investment of funds in the development of the capital market in Armenia, took concrete practical steps in this direction, making considerable investments in creation of a commercial structure - the holding Cascade-capital. I don't say we do not risk. As it is known, there is no commercial activity without risk, especially as we intend to introduce new methods of management in Armenia, new financial structures. Gerard Cafesjian undertook this risk and said: "Here is the money-go and make business. For my part I act as the shareholders' representative in Armenia, tasked to ensure that all the ethical norms in the business will be observed. Emmanuil Mkrtchyan , ARMINFO, 19 Jule, 2005 |
A new, unique structure appeared in the financial market of Armenia after the recent purchase of the full package of the shares of Emporiki bank Armenia (later renamed into Cascade Bank) by Cascade Capital, owned by the Cafesjian Foundation. Similar companies in foreign countries are called financial hypermarkets, i.e. original shops, which have a wide set of financial products and instruments in their arsenal. Jonathan Stark heads the holding Cascade Capital. He is famous in financial circles of the country, as he has been living and working in Armenia for 8 years and before his latest appointment, he was engaged in insurance business successfully. ARMINFO's correspondent succeeded to meet with Jonathan only after the last deal with the purchase of the bank was over and the holding started functioning fully.
