CBA: no reason for Iranian bank’s Armenian subsidiary closure

PanARMENIAN.Net - Central Bank of Armenia (CBA) deems possible closure of Iranian Mellat Bank’s Armenian subsidiary pointless, head of CBA Financial Monitoring Center said.

As Daniel Azatyan told a press conference commenting on Reuters article, Mellat Bank’s financial performance pointed to no reasons for terminating the institution’s activity.

“Mellat Bank CJSC was quite active during the initial phase of its activities, particularly In terms of development of Iranian-Armenian ties. However, significant drop in the bank’s assets has recently been recorded,” the expert said, adding that both U.S. and EU urge their banks against conduction of any transactions with Iranian financial institutions.

“Though CBA imposed no restrictions on transactions with Mellat Bank’s Armenian subsidiary, the country’s commercial banks were forced to halt cooperation with it to conduct transactions with foreign partners,” he said, adding that currently Mellat Bank cooperates with Tehran-based parent bank.

Dwelling on ACBA-CREDIT AGRICOLE BANK’s activity, Mr. Azatyan noted that Armenian commercial banks conducted no international transactions with foreign banks for the past 4-5 years.

“ACBA-CREDIT AGRICOLE BANK possessed correspondent account neither in Mellat Bank, not in any other Iranian bank,” the expert said.

The Central Bank of Armenia (CBA) earlier issued a response to Reuters article, claiming Iran expands presence in Armenian banking system, in answer to international sanctions.

“The banks in the Republic of Armenia, operating under the supervision of the Central Bank of Armenia (CBA), are subject to RA laws, CBA regulations and internal rules. One of CBA’s supervisory tiers is the provision of the adequate implementation of financial sanctions imposed on certain countries under relevant decisions of international organizations, such as the UN Security Council Resolutions.

Mellat Bank” CJSC has been operating in the Republic of Armenia since 1996; its clientele is primarily composed of small and medium enterprises involved in the foreign trade between the Islamic Republic of Iran and the Republic of Armenia, as well as of tourists and students. The bank’s activities and assets have dramatically decreased during the past 3-4 years; in the period from December 31, 2010 to July 1, 2012, the banks’ assets have decreased by more than 50%, dropping from USD 88 million to only USD 40 million. “Mellat Bank” CJSC holds no correspondent accounts either in the EU and the U.S. or in Armenia.

The banks in the Republic of Armenia, including “ACBA-Credit Agricole Bank” CJSC, hold no correspondent accounts with banks and financial institutions in the Islamic Republic of Iran. The banks in the Republic of Armenia are strictly bound to customer due diligence rules, in order to avoid any direct or indirect financing of individuals and companies related to nuclear proliferation programs,” CBA’s report reads.