YEREVAN, March 27. / ARKA /. In an exclusive interview with ARKA, Mher Abrahamyan, head of Financial System Regulation Department at the Central Bank of Armenia, said the process of Armenian banks’ transition to Basel III, started in Armenia back in 2011 is to be completed later this year.
He said the regulator had prepared and put into circulation new capital requirements that were discussed with the Union of Banks of Armenia and the banking community.
According to Mr. Abrahamyan, Basel III does not envisage changes in the required capital value for the banks (8%), which will be valid in Armenia’s case as well (12%). At the same time, tightened requirements will be applied in order to improve the structure and the quality of the capital.
“The main innovation in terms of capital under Basel III is the introduction of two new buffers – conservation capital and countercyclical capital. The main aim of these buffers is to provide banks with additional capital for absorbing possible losses on the one hand, and to restrict crediting amid economic upheaval and provide an extra crediting capacity in the event of a decline on the other hand. No sanctions are applied if banks fail to meet these requirements, but certain limitations will come into effect in that case, restrictions in dividend or bonus payments and in extra payments for bank staffs in particular,” he said.
He said that at the same time, principles are currently being studied and developed to detect and regulate systemically important banks.
The need for introduction of liquidity norms required by Basel III is being assessed. As to the leverage limitations, he said capital reservations and introduction of countercyclical buffers, certain legislation changes are required to make it possible: the respective works are under way. -0-