Araratbank to implement aggressive market strategy
25.09.2007,
21:03
Below is an exclusive interview of Board Chairman of the ARARATBANK Ashot Hosipyan to the ARKA News Agency.
Below is an exclusive interview of Board Chairman of the ARARATBANK Ashot Hosipyan to the ARKA News Agency.
ARKA: Your bank recently became an open-joint stock company. How has the bank changed its strategy as an open-joint stock company? What was Araratbank’s goal when it decided to become a an open joint-stock company.
A. Hosipyan: The current structure of joint-stock commercial banks in the world testifies that open joint-stock banks are making better progress than closed joint-stock banks. This is the result of the bank’s new aggressive strategy. In conformity with its new development strategy, the Araratbank must first all become more transparent, and relevant work is already under way. Secondly, as for any open joint-stock company, transparency is an additional source of financing.
ARKA: When does the bank plan to enter the IPO (initial public offering) market? Does it plan to enter international markets?
A. Hosipyan: We plan the first step, namely, the initial public offering before the end of 2007. The main task we intend to accomplish by means of the IPO is to increase the number of bank shareholders, but not the volume of financial resources. As the bank expands its activities and gains first IPO experience, we will start considering the possibility of entering international IPO markets?
ARKA: What is the planned IPO volume?
A. Hosipyan: The IPO will be within 10-15 per cent of the bank’s current capital, that is, the funds to be attracted from the IPO will total 600-800mln AMD. This will gave the bank a number of advantages. First, it will facilitate the bank’s further development and increase its profitability. Besides, in conformity with out strategic plans, the bank will implement a dividend policy. This policy will be in the center of attention of both shareholders and investors. At the same time, we pay much attention to the market value of shares. So the two important issues will be dealt with as a priority. I would like to note that the dividends will depend on the results of the bank’s activities. As regards those interested in fixed incomes, we offer them another instrument, namely, corporate coupon bonds. The first issue of the bonds has been a success, and the demand greatly exceeded the supply. This bond issue was most important for us as we gained some experience on the domestic bond market due to it.
ARKA: Does the bank plan any new bond issues? When is the second tranche of the bank’s corporate bonds expected, and what is its volume?
A. Hosipyan: We have planned the second issue of corporate bonds. The issue is being discussed now. The issue scenario is almost ready, and the terms of issue are being specified. I would like to note that we even had a second variant – issue of convertible bonds, which would be converted into the bank’s shares on the maturity date. However, we decided not to resort to an indirect issue of shares, so the second bond issue will be identical to the first one. As regards the volume, I would like to note that this issue is under consideration as well. The volume depends on a specific situation on the financial market and on the bank’s needs on the bond market. Our first bond issue was a pilot one – the bank was mastering a new instrument for attracting funds. In future, this product will be employed to attract funds.
ARKA: You have noted that the rise in the stock price is important for the shareholders as well. Under your circumstances, particularly with a stock market lacking, how can they make use of it?
A. Hosipyan: This issue is rather important for us. When we say we are working at IPO, we mean the entire process – from the design of the security (advertising, floating) to a policy of setting and maintaining the market price of shares. We are currently negotiating with market-makers, who are to maintain the shareholder value. It is important for us that a market instrument be formed, so the estimation procedure is most important. Also, we consider it important that investors holding Araratbank’s securities should be able to know about the prices of securities, forecast prices, and the estimation mechanisms in the financial sector every day.
ARKA: What are the bank’s regional policy plans? How many branches does it plan to open before the end of the year? What is the optimal number of branches for Araratbank?
A. Hosipyan: We plan to increase the number of our branches to ten before the end of the year. At present we have seven branches, with individual business plans. The bank is currently elaborating a branch network development concept for the next three years. As regards the optimal number of branches, it depends on the market situation, market capacity, competition on certain products. We are positioning ourselves as a retail bank offering high-quality services. So, simultaneously with the development of our branch network, it is most important for us to render relevant services, form close contacts with our clients, enlarge the package of services. All this must be favorably different from all that was offered before. Another specific feature of our regional policy is that we are considering the regions where the banking sector did not develop its activities before. Specifically, one of the components is the opening of our branch in Tsakhkadzor. In general, after a long discussion, the bank decided to work as a regional retail bank. Retail banks are considered the most attractive worldwide, and the activities the bank launched last last year – reception of public services payments, microcrediting, plastic card business development – testifies to actual transition to retail banking.
ARKA: What are the bank’s planned total scores for the year?
A. Hosipyan: We expect out profit to exceed 300mln AMD in 2007. We also hope that our assets will total 20bln AMD by the end of the year. At present, we are even surpassing the planned indicators. In the 2nd quarter the bank moved up to the 12th place as to the amount of assets, and our task is to be among the first ten banks during the next one year. But out priority task is to become a bank open to the public. In this context, we are restyling the bank. The bank will have new colors, a new logo, and the color we have chosen shows the bank’s position and the market situation. The bank plans active cooperation with international organizations. We have concluded a contract with the Izmyrlyan Foundation and are co-financing projects in Armenia. We are also negotiating with other international financial and commercial structures for cooperation.
ARKA: What new services does the bank plan? You have said that you have made a decision on retailing. What is you policy to the bank’s share on the service market?
A. Hosipyan: We are going to become a leading offerer of a rather wide range of services – from new types of plastic cards to new types of credits, both consumer and business credits. We are also working to open and serve new accounts, particularly mortgage and pension accounts, which are a novelty for our market. Tremendous work is being carried out in this field.
ARKA: What will be the Araratbank’s quality level after restyling? What will be your benefit?
A. Hosipyan: We are launching activities of a new quality as a joint-stock bank, which means a new level of relations with partners, investors, clients. This is the bank’s new philosophy, new policy – aggressiveness, innovation on the market. This account for the new colors the bank has chosen. Our color is wine red with tints of silver, a symbol of aggressiveness. But, in contrast to red, wine red symbolizes impartiality. We are sure that we will accomplish the tasks we have set ourselves.
ARKA: When do you plan the action?
A. Hosipyan: From October 1 the bank will position itself at a new level and in a new role. This is a serious commitment to shareholders. Our task is to make our bank opener than other banks working on the financial market. –0--
ARKA: Your bank recently became an open-joint stock company. How has the bank changed its strategy as an open-joint stock company? What was Araratbank’s goal when it decided to become a an open joint-stock company.
A. Hosipyan: The current structure of joint-stock commercial banks in the world testifies that open joint-stock banks are making better progress than closed joint-stock banks. This is the result of the bank’s new aggressive strategy. In conformity with its new development strategy, the Araratbank must first all become more transparent, and relevant work is already under way. Secondly, as for any open joint-stock company, transparency is an additional source of financing.
ARKA: When does the bank plan to enter the IPO (initial public offering) market? Does it plan to enter international markets?
A. Hosipyan: We plan the first step, namely, the initial public offering before the end of 2007. The main task we intend to accomplish by means of the IPO is to increase the number of bank shareholders, but not the volume of financial resources. As the bank expands its activities and gains first IPO experience, we will start considering the possibility of entering international IPO markets?
ARKA: What is the planned IPO volume?
A. Hosipyan: The IPO will be within 10-15 per cent of the bank’s current capital, that is, the funds to be attracted from the IPO will total 600-800mln AMD. This will gave the bank a number of advantages. First, it will facilitate the bank’s further development and increase its profitability. Besides, in conformity with out strategic plans, the bank will implement a dividend policy. This policy will be in the center of attention of both shareholders and investors. At the same time, we pay much attention to the market value of shares. So the two important issues will be dealt with as a priority. I would like to note that the dividends will depend on the results of the bank’s activities. As regards those interested in fixed incomes, we offer them another instrument, namely, corporate coupon bonds. The first issue of the bonds has been a success, and the demand greatly exceeded the supply. This bond issue was most important for us as we gained some experience on the domestic bond market due to it.
ARKA: Does the bank plan any new bond issues? When is the second tranche of the bank’s corporate bonds expected, and what is its volume?
A. Hosipyan: We have planned the second issue of corporate bonds. The issue is being discussed now. The issue scenario is almost ready, and the terms of issue are being specified. I would like to note that we even had a second variant – issue of convertible bonds, which would be converted into the bank’s shares on the maturity date. However, we decided not to resort to an indirect issue of shares, so the second bond issue will be identical to the first one. As regards the volume, I would like to note that this issue is under consideration as well. The volume depends on a specific situation on the financial market and on the bank’s needs on the bond market. Our first bond issue was a pilot one – the bank was mastering a new instrument for attracting funds. In future, this product will be employed to attract funds.
ARKA: You have noted that the rise in the stock price is important for the shareholders as well. Under your circumstances, particularly with a stock market lacking, how can they make use of it?
A. Hosipyan: This issue is rather important for us. When we say we are working at IPO, we mean the entire process – from the design of the security (advertising, floating) to a policy of setting and maintaining the market price of shares. We are currently negotiating with market-makers, who are to maintain the shareholder value. It is important for us that a market instrument be formed, so the estimation procedure is most important. Also, we consider it important that investors holding Araratbank’s securities should be able to know about the prices of securities, forecast prices, and the estimation mechanisms in the financial sector every day.
ARKA: What are the bank’s regional policy plans? How many branches does it plan to open before the end of the year? What is the optimal number of branches for Araratbank?
A. Hosipyan: We plan to increase the number of our branches to ten before the end of the year. At present we have seven branches, with individual business plans. The bank is currently elaborating a branch network development concept for the next three years. As regards the optimal number of branches, it depends on the market situation, market capacity, competition on certain products. We are positioning ourselves as a retail bank offering high-quality services. So, simultaneously with the development of our branch network, it is most important for us to render relevant services, form close contacts with our clients, enlarge the package of services. All this must be favorably different from all that was offered before. Another specific feature of our regional policy is that we are considering the regions where the banking sector did not develop its activities before. Specifically, one of the components is the opening of our branch in Tsakhkadzor. In general, after a long discussion, the bank decided to work as a regional retail bank. Retail banks are considered the most attractive worldwide, and the activities the bank launched last last year – reception of public services payments, microcrediting, plastic card business development – testifies to actual transition to retail banking.
ARKA: What are the bank’s planned total scores for the year?
A. Hosipyan: We expect out profit to exceed 300mln AMD in 2007. We also hope that our assets will total 20bln AMD by the end of the year. At present, we are even surpassing the planned indicators. In the 2nd quarter the bank moved up to the 12th place as to the amount of assets, and our task is to be among the first ten banks during the next one year. But out priority task is to become a bank open to the public. In this context, we are restyling the bank. The bank will have new colors, a new logo, and the color we have chosen shows the bank’s position and the market situation. The bank plans active cooperation with international organizations. We have concluded a contract with the Izmyrlyan Foundation and are co-financing projects in Armenia. We are also negotiating with other international financial and commercial structures for cooperation.
ARKA: What new services does the bank plan? You have said that you have made a decision on retailing. What is you policy to the bank’s share on the service market?
A. Hosipyan: We are going to become a leading offerer of a rather wide range of services – from new types of plastic cards to new types of credits, both consumer and business credits. We are also working to open and serve new accounts, particularly mortgage and pension accounts, which are a novelty for our market. Tremendous work is being carried out in this field.
ARKA: What will be the Araratbank’s quality level after restyling? What will be your benefit?
A. Hosipyan: We are launching activities of a new quality as a joint-stock bank, which means a new level of relations with partners, investors, clients. This is the bank’s new philosophy, new policy – aggressiveness, innovation on the market. This account for the new colors the bank has chosen. Our color is wine red with tints of silver, a symbol of aggressiveness. But, in contrast to red, wine red symbolizes impartiality. We are sure that we will accomplish the tasks we have set ourselves.
ARKA: When do you plan the action?
A. Hosipyan: From October 1 the bank will position itself at a new level and in a new role. This is a serious commitment to shareholders. Our task is to make our bank opener than other banks working on the financial market. –0--
