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"ONE CAN NOT ONLY WORK IN KARABAKH BUT ALSO WORK SUCCESSFULLY"

The interview given to ARMINFO by Chairman of the Board of the Artsakhbank closed jsc Kamo Nersissyan

Q: During our last interview you spoke about the activity of foreign investors, who wish to invest their money in the bank's capital. Tell me, please, how successful have these plans turned out to be? Are you going to increase the bank's capital in 2002 and, if it's not a secret, to what extent?

A: It's not a secret. Our investors are interested in strengthening the bank's positions in Armenia and in its successful activities. That's why in 2001 we increased the bank's authorized capital by 100 mln drams and this year are going to increase the capital by $1 mln.

Q: What do you think about the CB's toughening the banking legislation and the standard requirements?

A: We completely support the CB's policy to toughen its standard requirements. A client, be it a private investor or a manufacturing enterprise, first of all wants his investment to be safe and accumulating. As a matter of fact, a bank's financial stability, its history, the competence of its managers and staff, the reliability and respectability of its founders, its being honest towards its rivals on the market are more important than the scale of its activities.

Q: Your bank, as a rule, operates at profit. How do you manage to achieve comparatively good results given the high risks of an economy having just begun to lick its war wounds and to implement development programs? What profit did you have in 2001?

A: Of course, there is a risk. But we demonstrate by personal example that one can not only work in the region but also work successfully. Military actions have nearly destroyed the country's economy, but after the truce the government began to quickly restore it. If in 1998-2000 the Artsakhbank's summary crediting of Karabakh's economy was 5.683 bln drams, in 2001 alone it exceeded 5 bln drams. Given such a credit portfolio we stick to a reasonable credit policy aimed not at receiving superhigh profits, even if they come from the Government, but at investing money in projects ensuring reimbursement of credits and forming stable income for the bank. As for the size of the profit, it was nearly 135-140 mln drams in 2001.

Q: How do you estimate the business environment in Karabakh? What is the credit capacity? What do you think about the development of SME and what programs is the banks implementing to support this sector?

A: Karabakh's banking sector is developing more quickly than the country's economy. We understand that the financial market should be developing alongside with the real sector of economy as otherwise such an imbalance may sooner or later result in a general system crisis. That's why our bank gives priority to the SME support as this sector is the pivot of the country's economy and is progressing very quickly. If previously one did business on trade now he does it on industry and services.

As for solvency, we have nearly 20 large clients, whom we credit with nearly 100% assurance that we'll get them back in time. Besides using its own funds to support business the bank tries to attract money from international organizations. Arstakhbank is a participant of the Lincy Foundatioan and is negotiating the issue with the Eurasia Foundation and GAF.

Q: Your bank is known to credit the economy both at its own expense and from the budget and to cover all the branches of the people's economy of Karabakh. Are you satisfied, a banker, with the efficiency of the investments made?

A: The bank has invested a total of 10.5 bln drams in the region over the last years. Unredeemed credits total nearly 65 mln drams, this accounting for only 0.6% of the total credit investments. This is one of the lowest indices among the commercial banks of Armenia and I suppose that the results of our activity are quite encouraging.

Q: The Karabakh leadership attaches special attention to the development of agriculture and the agroindustrial complex. How are things in that sector? Does anybody cooperate with the bank on export-oriented investment programs? Could you, please, specify any successful projects. And one more question: Artsakhbank has nearly redoubled the volume of credit investments during the third quarter of 2001. Is that connected with the implementation of specific large investment programs or one can speak about a general revival of Karabakh's economy?

A: Being one of the most developed branches of Karabakh's economy in the Soviet times and supplying the manufacturing industry with raw materials, agriculture has fallen into decay because of continuous military actions.

That's why in 1998-1999 the Karabakh Government together with the bank has drafted and implemented a 1.500 bln drams investment program to restore the basic agricultural branches: viticulture and cattle-breeding. Both short- (12 months, 15%) and long-term (up to 6 years, 6%) credits were provided under the program. In 2000-2001 Artsakhbank credited the manufacturing industry for $2 mln against the government guarantees. Large manufacturing enterprises, like flour-mill and meat-packing plant, began to operate using local raw materials. A production of high-quality spirits was organized as well, the drinks meeting all the world standards and being exported to Russia, the U.S. and other countries. That is the cause of such an increase in the bank's credit investments.

Q: What are the results of the works to establish correspondent relations with foreign banks?

A: Through its Central Branch in Yerevan Artsakhbank has established correspondent relations with Deutschebank, Vennabank and the Savings Bank of the Russian Federation. We are also negotiating for opening correspondent accounts at other large banks.