by Arthur Yernjakyan
The Government of Armenia is going to include corporate bonds in the compulsory deposit security mechanism. For the personal deposits the compulsory component of the law has been effective since 2005.
The legislative initiative on compulsory security of corporate deposits in banks has been submitted for the consideration of the Government by ex-Prime Minister of Armenia, MP Hrant Bagratyan. On March 6, Armenian Economy Minister Vahram Avanesyan told journalists that the executive power is not against such application of the law, but the given issue should be discussed with businessmen. “On the whole, the Government has a positive attitude to it”, said Avanesyan. However, it is not clear yet to what extent the corporate deposits will be secured.
He added that the Government secures the deposits of those who cannot assess the risks independently. It mostly concerns small and medium enterprises. The minister thinks that the corporate deposits in the banks should be secured to the same extent as the personal deposits.
In 2010 the law "On the guarantee of compensation for personal deposits in banks" was amended and the maximum guarantee threshold was doubled from 2 mln to 4 mln AMD for AMD deposits and from 1mln AMD to 2 mln AMD for foreign exchange deposits. The threshold of the commercial banks’ contributions to the deposit insurance fund was increased from 2.5% of the deposit portfolio to 5%. The Central Bank of Armenia is the sole founder of the fund.