Concentration of the Banking Sector of Armenia Remains Low

RA Central Bank of Armenia (CBA) considers that concentration of the banking sector remains low. This is mentioned in CBA Financial Stability Report 2015.

This means, there are no oligopolies in the banking market, which may dictate rules of the game.

The Herfindahl – Hirschman Concentration Index varies between 0 and 1, characterizing the level of concentration (values near 0 denote lower concentration).

“The Herfindahl-Hirschman Index of Concentration for main balance sheet items (assets, liabilities, total capital) denotes that concentration of the banking sector remains low, which limits the likelihood of the impact of concentration risk on the financial stability,” CBA report reads.

Note, this assessment refers 2015, when there were 21 commercial banks and one development bank (Pan Armenian Bank JSC) functioning in the Republic of Armenia.

To all probabilities, Concentration Index will grow in 2016, as Pro-Credit Bank and BTA bank have already been bought by other Armenian banks, and until the end on ongoing year other merge deals are anticipated as well.