Mr. Sukiasyan, a number of banks in the Armenian financial market offer high interest rates on deposits of various kinds. How would you explain this phenomenon?
– Indeed, this phenomenon is observed, when some of the banks try to expand their customer base by offering high interest rates. These kinds of offers may seem attractive at first sight but they contain implicit risks. The presence of interest rate higher than the developed rate in the market is an unreasonable phenomenon for banks, as all the banks try to attract the most accessible resources. If any bank offers higher interest rates to customers, then one can conclude that this bank does not take into account the upcoming risks and tries to get resources by all means, while such a phenomenon often proves that the banks has a liquidity problem. By depositing amount in such bank the customer must take into account that the attractiveness of the bank offers still does not ensure the safety of the deposit. At the same time the customer must also take into account that the high interest deposits are transformed into loans with high interest later.
– Mr. Sukiasyan, decrease of loan interest rates is observed in the market. Some banks implement refinancing of business loans operating in other banks. How would you estimate this phenomenon?
The practice of refinancing of loans is widely spread in the world. Recently it is practiced in our country as well. Refinancing of the loan is a positive phenomenon for the customer if it does not contain implicit risks. However I should warn that the attractive interest rate very often is deceptive at first glance, however I should warn that being attracted by seemingly low interest rate the client does not take into consideration other important factors, such as different types of fees are applied and the customer pays a higher interest rate than before refinancing and penalties in case of repayment of loan ahead of schedule.
I should like to speak of another innovation and that is short time of allocating of loan just by submitting identification documents. Such kind of loans are also attractive offers for the customer at the moment of receiving the loan, as they allow to avoid the unnecessary red tape and loss of time. But the customer should not forget that in future he will have to pay much more to the bank than the original loan amount. Also I want to note that that bank does not mainly perform advisory function in case of such amounts, as advising is sidelined for the customer, and the customer often does not realize that he will have problems with payment in future. Such style of work will lead to dissatisfaction of the customers and that it will have its impact on the image of the rest of banks performing regular consulting function.
Often the customers do not read the contracts they are signing in the result of which further unplanned costs are borne by them. Therefor the customer must study the contracts in detail he is going to sign and initially know the exact amount he is going to pay to the bank.
– Mr. Sukiasyan, currently 21 banks operate in Armenia. Do you think 21 banks too much for the Armenian market?
The market itself should regulate the number of banks. Targeted interference is not accepted. The public itself should choose the bank to cooperate with. The banks carrying out different manipulations will be rejected over the time being forced either to be liquidated or merged with other banks. The healthy competition refers to the interests of the real sector of economy and lead to reduction of interest rates.