By Shakeh Avoyan
Scores of concerned depositors flocked on Friday to the head office of Credit Yerevan, one of Armenia’s largest commercial banks teetering on the brink of collapse after incurring substantial losses.
The clients holding savings accounts demanded their money back en masse after the Armenia Central Bank took over the troubled bank’s management earlier this week, in an extraordinary move that could herald its eventual bankruptcy.
“We want our money back, but they don’t let us withdraw cash for almost a month,” said one angry depositor who did not want to be identified.
Credit Yerevan, whose net assets exceed 17.5 billion drams ($31.4 million), posted about 50 million drams worth of losses in the third quarter of this year. Its financial position has steadily deteriorated over the past several years.
Many of the bank’s estimated 8,000 depositors blame its former owner, parliament deputy Martin Hovannisian, for the crisis. Hovannisian sold it to a Moscow-based Armenian businessman earlier this year.
Meanwhile, officials at the Central Bank and the Armenian Bank Association, downplayed Credit Yerevan’s latest troubles, saying that it is still possible to save it from collapse.
Still, the panic triggered by the bank’s inability to service its deposit accounts could deal a serious blow to the country’s entire banking sector which has been slowly restoring Armenians’ trust in financial institutions since the collapse of several pyramid schemes in the early 1990s. The aggregate number of savings accounts in Armenia has increased by ten percent this year.
The crisis in Credit Yerevan reflects broader problems facing the majority of 29 Armenian banks. Bankruptcy proceedings are currently underway against six of them. The chairman of the Central Bank, Tigran Sarkisian, has blamed the sector’s woes on poor management and irresponsible decision-making.