Thursday, January 15 2015 19:37

Ameriabank has started the new fiscal year with an announcement on acquisition of the loan book of Norvik Universal Credit Organization (UCO). The press service of Ameriabank has told ArmInfo that Norvik UCO has sold part of its portfolio to Ameriabank. No further information about the details of the deal is reported.  

To note, it is not the first case that Ameriabank is increasing the total value of assets due to synergy. The only difference is that in the case of Cascade Bank the matter concerned a merger (which was completed in June 2010), whereas Norvik UCO underwent acquisition. The merger of the Cascade Bank and Ameriabank in June 2010 enabled the latter to increase the assets to 154 bln AMD by 1 October 2010 and to rise from the sixth position to the second one and then to take the lead in the banking system with assets worth 334 bln AMD as of 1 October 2014. The acquisition of Norvik UCO enables Ameriabank to retain leadership in terms of assets. It is noteworthy that at the moment of the given deal, Norvik UCO was among the TOP-5 universal credit companies by its key indices, including total capital. ArmInfo experts think that this has become an additional benefit for Ameriabank in terms of growth of the given index, whose standard has recently been increased by the Central Bank of Armenia to 30 bln AMD. Nevertheless, the experts think that even without that acquisition Ameriabank's total capital is 8 times as much as the current lower requirement and almost 40% as high as the expected index starting from 2017.

It should be noted that on the financial market of Armenia mergers and acquisitions were first registered in 2003, when the newly-established Ardshininvestbank (currently Ardshinbank -editor's note) acquired the performing assets of Ardshinbank and Agrobank. In July 2009 Cascade Credit UCC merged with Cascade Bank and a year later merged with Ameriabank. In August 2009 ARARATBANK acquired Izmirlian- Eurasia UCC. In the meantime, credit and insurance companies also underwent mergers and acquisition.       
The experts point out that the introduction of a new standard of minimum total capital (30 billion drams versus current 5 billion drams) in the banking system of Armenia starting January 1 2017 will lead to merger of banks and bigger actors will emerge in the banking sector. According to the Central Bank, this, in turn, will ensure a higher quality and more accessible banking services and healthy competition. In addition, the banking sector will become more efficient and stable. Favorable environment will be created for introduction of new technologies and products, which will help involving Armenian banks into the international equity market and creating a basis for further enhancement of cooperation. The banks will become more flexible and resistant to economic shocks. This will promote also financial mediation. 

According to the Financial Rating of Armenian Banks and Credit Companies quarterly prepared by the experts of the Agency of Rating Marketing Information, as of 1 Oct 2014, the assets of Ameriabank amounted to 334.1 bln AMD (1st position, 12.6% y-o-y growth), total capital - 40.9 bln AMD (5th position, 5% y-o-y growth), lending - 207.1 bln AMD (2nd position, 27.4% y-o-y growth), accumulated profit - 15.1 bln AMD (4th position, 13% y-o-y growth). As of 1 Oct 2014, the assets of Norvik UCO totaled 17 bln AMD (5th position among the UCOs, 28% y-o-y growth), total capital - 7 bln AMD (4th position, 2.8% y-o- y decline), lending - 14.7 bln AMD (5th position, 22.1% y-o-y decline), accumulated profit - 1.3 bln AMD (5th position, 13.8% y-o-y decline). Since the entry into the Armenian market before merging with Ameriabank (2006-2014), the annual net profit of Norvik UCO has sagged from the positive 1.8 bln AMD to negative 233.2 mln AMD, experiencing quarterly decline since 2010, apparently, due to deterioration of the loan book during the financial crisis period and due to the writing-off of the toxic loans. Norvik UCO has been operating on the Armenian financial market since July 2006 and its sole owner is Norvik Bank (Latvia). Ameriabank CJSC (former Armimpexbank, which has been operating on the market since 1996, changed its shareholders in 2006 and was renamed in 2008) is a universal bank providing investment, corporate and retail banking services. Ameria Group CY Ltd. is the sole owner of the Bank.