ARMENIA’S BANKERS ARE AMBIGUOUS IN NECESSITY OF SECURITIZATION OF ASSETS
arminfo
2008-05-22 01:13:00
ArmInfo. Armenia’s bankers are ambiguous in necessity of securitization
of assets, the results of voting of May 21 "English Debates" in
"Marriott Armenia" Hotel, organized by an independent rating agency,
member of the international Global Rating Group, certify. The debates,
with participation of over 30 representatives of commercial banks,
heads of credit companies, investment companies and experts, were
dedicated to the topic ‘Securitization as a Required Tool for
Increasing Liquidity of Banking Assets. Is that Right?’.
The event was held under support of the Union of Banks of Armenia,
USAID and East West Management Institute within the frames of the
Partners for Financial Stability programme.
Member of the Central Bank Board Karine Minasyan said in her speech
that CB is currently working over implementation of new alternative
tools for regulation of the processes of securitization of banking
assets.
The first tool is a possibility of issuing mortgage bonds by banks
and credit organizations. Moreover, free issues will be carried
out under tight control of a megaregulator. "We envisaged numerous
regulatory mechanisms to assure high reliability of these securities
and confidence of investors", she said. The second tool will be a
"pure" form of securitization, which envisages real sale of assets to
a specially created legal person. "The draft laws we intend to shortly
introduce, envisage a possible alternative, due to which any market
participant will be able to realize different initiatives in the area
of securitization", K. Minasyan said. Along with it, member of CB Board
presented the advantages the market participants will receive using
the tools of securitization of assets. "In particular, this will allow
the companies to extend their business, receive an additional income,
manage the credit risks more efficiently and release the resources",
K. Minasyan said.
For his part, co-Director of AEPLAC Tigran Jrbashyan said that
securitization in Armenia is not a new phenomenon. ‘In a period of
privatization in Armenia in 1993-94, when the major part of the state
property was transformed into a form of unclear joint- stock companies,
an elementary securitization of state assets was also observed, a so
called voucherization’, T. Jrbashyan said and added that a postulate on
non-readiness of Armenia for securitization may be ruled out. ‘provide
the market with a tool and, believe, the Armenians will make a profit
of it’, he said part in play. In addition, he said, not only mortgage
loans but consumer credits as well may be subject to securitization
of assets in Armenia. Along with it, T. Jrbashyan emphasized that
implementation of international standards during securitization is
an important moment for attraction of funds.
T. Jrbashyan expressed confidence that a boom around the banking
assets shows that there are banks in the country with enough capital
for investment in securities. ‘They need a relevant tool. However,
a certain liquidity problem exists in the banking system, especially
in the actively working banks. Despite the fact that the Armenian
market is not integrated enough in the world one, the volume of
available resources reduced, and this problem will intensify’, AEPLAC
co-director said.
Director of the ‘Capital Assets Management’ Investment Company Tigran
Karapetyan, holding to the opinion of international experts, said
that the minimum volume for profitable and efficient securitization
should exceed $250 mln. T. Karapetyan thinks that securitization of
assets in Armenia may be efficiently carried out only in case of a
cumulative credit portfolio of the Armenian banks, totaling about
$1.5 billion. ‘Only in this case, securitization will be profitable,
however, unification of the banks in one pool is not real’, he
emphasized. T. Karapetyan divided the risks during securitization into
two types: the market and legal risks. Talking about the first one,
he said that the property is a pledge of the credit portfolio of the
banks being an object of securitization. Based on this, he said, the
size and quality of credit portfolios largely depend on the state of
the real estate market being in a state of overheating. As for the
legal risk, T. Karapetyan expressed an opinion that not the whole
legislation covers the available legal risks today. Along with it, he
shared the viewpoint that securitization will be impossible without
the relevant international standards, as assessment of assets and
the property is connected just with them.
T. Karapetyan thinks that not all the banks of the country need
securitization today. ‘The current liquidity ratio of the Armenian
banks exceeds the required CB standards one and a half times. In
any case, if the bankers think about increase of liquidity of their
assets, securitization will not become a task of prime importance
for them. An international institutional investor is necessary for
the first successful securitization in Armenia. However, under the
present crisis in the international market, I do not think that its
attraction in a short-term prospect is real’, he said.
Deputy Chairman of the Board of ‘Converse Bank’ Tigran Davtyan,
who also marked a non-topical nature of securitization of assets
in Armenia, substantiated his position by the fact that even simple
bonds in the country are presently sold with difficulty. ‘Currently,
the local banks experience a problem of liquidity, and a deficit
of available long-term resources is the greatest problem for
them. Therefore, the market today is not ready for securitization’,
T. Davtyan emphasized.
To note, the independent Rating Agency AmRating, being part of the
GlobalRating Rating group, which also includes RusRating (Russia)
and KzRating (Kazakhstan) agencies, is the organizer of the English
debates. The Agency’s main activity is conferment of credit ratings
to the banks, as well as their debt instruments, compilation of
analytical reviews about different signets of the financial market.