The Central Bank of Armenia has submitted to the parliament the draft amendments and additions to the Law "On Banks and Banking" and "On Insurance" aimed at ensuring compliance with at least 93% of financial organizations' activities in accordance with international standards. Deputy Chairman of the Central Bank of Armenia Nerses Yeritsyan stated this in the parliament, introducing the package of amendments to the first reading.

According to him, banks need additional capital buffer to cover the risks through the capital, and not through the means of clients in case of external shocks. In other words, with the current minimum standard of capital, it is also necessary to set requirements for additional capital.

Additionally, it is recommended to review the norm of the maximum loan size per borrower, which currently accounts for at least 20% of the capital. He explained that in many countries there is a tendency to grow up to 30%, so it is necessary to set new limitations to avoid further damage caused by shocks.

The next change relates to the introduction of the concept of a systemic bank, setting more tough controls for them, as the impact of these banks on the market can be measured with serious losses in case of shocks. To limit the credit burden, the Central Bank proposes to establish a norm of ratio of liabilities and collateral.

Changes related to the insurance market concern the creation of responsible actuaries and internal audit protection mechanisms whose activities, though paid by insurance companies, must be independent. Additionally, the Central Bank suggests setting standards for life insurance.

It should be noted that currently there are 17 banks and 6 insurance companies operating in Armenia, as well as 33 credit organizations (including 3 leasing companies).

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