Since January 1, 2006, the Central Bank of the Republic of Armenia has taken on responsibility for regulation and supervision of the Armenian financial sector. The primary motivation for creating a single supervisory authority was to oversee general risks in the financial market. The trends of merger of banking, insurance and securities businesses all over the world are typical to the developments of the financial market. This requires that the supervision launch a complex monitoring of the development trends in the financial market, evaluate risks inherent in various segments of that market and measure their impact on overall developments of the financial sector.
The banking sector is the largest participant in the Armenian financial market, as it accounts for about 85.5% of financial system assets.
As of December 31, 2018, participants in the Armenian financial market included:
- 17 banks 536 branch offices,
- 39 credit organizations with 211 branch offices,
- 7 insurance companies and 3 insurance brokers,
- the securities market participants, which include 11 investment companies, 3 investment fund managers, the Central Depositary of Armenia, the NASDAQ OMX Armenia, 17 commercial banks, 7 insurance companies, 39 credit organizations and 22 reporting issuers,
- 127 pawnshops,
- 213 exchange offices (branches not included),
- 8 money transfer companies,
- 6 companies dealing with processing and clearing of payment instruments and payment documents,
- 22 reporting issuers.
As of December 31, 2018, the banking sector had:
- total assets amounting to AMD 4 trillion 986 billion
- total liabilities amounting to AMD 4 trillion 238 billion
- total capital amounting to AMD 749 billion.
Credit to the economy accounts for 58,8% of banking system assets (or AMD 2 trillion 932 billion), and the loans of "standard" category account for 95,3% of the credit. Funds attracted from individuals and companies (excluding financial institutions) account for 64,3% of banks' liabilities (or AMD 2 trillion 728 billion). The paid-in statutory fund of the banking sector amounts to AMD 505,0 billion.
As of December 31, 2018, concentration in the banking sector has been low: the Herfindahl-Hirschman Index of Concentration is 0,089 by total assets, 0,095 by total liabilities, and 0,068 by total capital.
The Financial Supervision Department of the Central Bank is charged to carry out banking supervision. The Financial System Stability and Development Department, the Financial System Regulation Department and the Law Department, the other structural units of the Central Bank, are responsible for carrying out activities related to methodological and development aspects of the financial sector. A Licensing and Supervision Committee has been set up within the Central Bank in order to address relevant issues in the field and make recommendations. The Committee consists of chairman of the Central Bank, deputy chairmen of the Central Bank, and heads of Financial Supervision Department, Financial System Stability and Development Department, Financial System Regulation Department, and Law Department. The banking supervision is carried out through on-site inspections daily off-site supervision. On-site inspections can be both comprehensive, involving all spheres of activity, and targeted aimed at a specific sphere of activity. On-site inspections are scheduled according to the annual plans which are prepared on a regular basis.
As of December 31, 2018, credit organizations had:
- total assets amounting to AMD 556,5 billion
- total liabilities amounting to AMD 262,1 billion
- total capital amounting to AMD 294,3 billion.
As of December 31, 2018, insurance companies had:
- total assets amounting to AMD 51,6 billion
- total liabilities amounting to AMD 32,4 billion
- total capital amounting to AMD 19.2 billion.
As of December 31, 2018, investment companies had:
- total assets amounting to AMD 56,6 billion
- total liabilities amounting to AMD 45,9 billion
- total capital amounting to AMD 10,6 billion.
As of December 31, 2018, pawnshops had:
- total assets amounting to AMD 10.3 billion
- total liabilities amounting to AMD 8.5 billion
- total capital amounting to AMD 1.8 billion.
Over the year 2018, a total of 213 exchange offices carried out the following transactions:
- purchased US dollar amounting to $ 393.4 million and sold US dollar amounting to $ 393.1 million
- purchased Euro amounting to € 59.8 million and sold Euro amounting to € 56.6 million.
As of December 31, 2018, a total of 17 commercial banks as investment service providers, 11 investment funds, 7 insurance companies, 39 credit organizations, 22 reporting issuers and 3 investment fund managers operated in the Armenian securities market. 2 investment fund managers are licensed to carry out mandatory pension funds’ management. Each of the investment fund managers has control over 3 mandatory pension funds.
- As of December 31, 2018, the six mandatory pension funds’ Net Asset Value (NAV) amounted to AMD 157.2 billion. At the end of the year NAV to GDP stood at 2.6%.
The Armenian securities market also incorporates the Central Depositary of Armenia and the NASDAQ OMX Armenia, an organizer of foreign currency trade and securities trade auctions.
As of December 31, 2018, there have been securities of 22 reporting issuers admitted to trading on a regulated market (NASDAQ OMX Armenia).