OREANDA-NEWS. June 17, 2010. Mr.Davtyan, in the second half year of 2009 the Council and Board of Converse Bank underwent some changes. How have these changes affected the tactics and strategy of the bank?

Indeed, in 2009 two new members joined the Council of Converse Bank. The rich experience of these experts helps us considerably. A commission for loans and books was set up under the Council of Converse Bank, and risk management was toughened to stiffen the control over big loans. Generally speaking, the admission of new members to the Council has not changed the bank policy much, only the approach to work has been toughened. The bank still remains universal and implements the same functions. Actually, the only crucial change was the department set up to refund inefficient assets. The department works successfully, and its effectiveness is already obvious.

Active portfolios are being redistributed in the banking system. Converse Bank has always been a universal bank, and the portfolio of retail loans has been developing alongside with the corporate portfolio. However, this ratio must have changed somehow during the crisis period, when the retail volumes considerably declined. In addition, the market acquired new players, who intended to lay hold of the main clientele base and attract big financial flows from export and import companies via these clients. This situation has changed the market. How has it been reflected on Converse Bank? What changes have taken place since the second half year of 2009, and what position does the bank hold at present?

The bank is still universal and we are not going to leave the former segments. At the same time, we intend to increase the loans to small and medium enterprises (SME), and at the same time, not to disregard the big loans. I think that over the crisis period one should provide small loans rather than big ones. For instance, it is less hazardous to provide 10 loans worth 500 thsd each than 1 loan worth 5 mln. Thus, SME loans and retail credits will be prevailing in the bank credit portfolio. The bank has quite diversified sources of financing, including the WB, German KfW, Millennium Challenge, IFAD, RESCAD, EBRD and others. The bank is also involved in mortgage programs. In addition, the bank is cooperating with two international organizations for new credit lines. We are going to increase the portfolio of loans to small and medium enterprises by 20%-25% to USD20 mln, and retail loans - by 20%-30% to USD70 mln till the end of 2010.

What new products is the bank going to introduce in the market to maintain its banking "hobby-horse", i.e. the high-quality credit retail, in which the bank has been engaged for a long time and has efficient technologies already?

At present we are going to increase the spectrum of both credit and deposit services. At the same time, we are striving to maintain flexibility and deny not a single client the necessary services. We have toughened the requirements to the clients, but never suspended any services. It is noteworthy that even over the crisis period we did not stop providing our regular clients with preferential tariffs, for instance, providing loans at lower rates.

We also have a wide spectrum of AMD, USD and EUR deposits with a period ranging from a month to 16 years. There are cumulative and standard deposits. We have recently introduced a new kind of account - impersonal metal account, which contains gold in grams without any specific indications of the gold bars. When a client opens the account, the bank acquires gold equivalent to the total volume of the account. The account is replenished in AMD equivalent according to the 999.9 fineness gold price for the given day.

Like any other banking accounts, the client may replenish his metal account and carry out cashless transfers in gold. In addition, at present we sell standard gold bars with the weights ranging from1 g to 12 kg that we acquire from various suppliers. In short, we are striving to introduce new tools. I'd like to recall that our bank was among the first to introduce the "Children's" and "Pension" deposits, which are actually very profitable products. As regards the credit products, we did not stop providing these credits to individuals and legal entities for a single day over the crisis. We just did not panic and did it persuade our clients to replace the AMD loans with USD ones. That is to say, we were honest towards our clients. Moreover, we intend to hold the leading positions in the market of credit cards. As you know, we are not only the member of Visa, but we have become a full member of MasterCard as well. In the card business we focus on salary projects.

It is not less important that we pay much attention to the quality control not only in the head office, but also all the branches. We are working at introduction of new services on IT basis, taking into account that we have raised the whole IT basis to the international level. An IT adviser from Argentina regularly comes to Armenia and checks the information security and reserve centers. In addition, we have launched e-banking. You can observe an inverse process in Converse Bank: now it is we that look for customers, today it is quite hard to find good customers, especially, in SME, isn't it?

What policy does the bank conduct with respect to interest rates and how much efficient were the CB regulative measures to "stifle" USD?

It has turned out that AMD has absolutely disappeared from the market. There are two still relevant problems in the market today: lack of coincidence in periods of attracted funds and crediting, which causes some rupture in time; and shortage of AMD resources, while clients want just AMD resources, as they receive their takings in drams.

How do you assess the problem of inefficient loans in the bank and in Armenia's banking system in general?
In 2009 we fixed a loss, which included two big components. One of them is currency re-estimation, due to which we lost a big amount; the second one is "relieving" the portfolio of inefficient loans. It is noteworthy that in some cases our domestic requirements to the borrowers are tougher than those laid down by the Central Bank. Having relieved the portfolio in 2009, we tried to be honest towards both our founders and clients. The most important thing is that the quality of loans provided over the crisis period is at a quite good level. I think many banks have still to write off the inefficient loans. Now we are trying to work with these borrowers and remove the crisis aftermath by means of specific crisis management.

In 2010 we have already started working with profit. According to pessimistic forecasts, we shall ensure at least 1.5 bln AMD profit, whereas in Q1 2010 we ensured almost 625 mln AMD net profit.