Armenia's best export is its people and the government is hoping to tap its wealthy diaspora by setting up a global retail bank that can funnel some of their money into projects back at home.
There are three times more Armenians living outside the country than in it and remittances make up the single biggest hard currency earner for the country; it seems no matter how far Armenians travel, their hearts remain at home. The government wants to capitalise on this loyalty and instead of waiting for the money to be sent home, it will go out and get it by setting up a bank with branches all over the world. "It is a global retail bank that will target Armenians living overseas," Armenia's minister of economy, Nerses Yeritsyan, tells bne during May's annual meeting of the European Bank for Reconstruction and Development in London. "Imagine: if only 1% of all Armenians take a credit card from the new bank, then that will generate enough money for us to say goodbye to [international financial institution] funding forever."
The inflow of remittances is already worth billions of dollars a year, but this is only the tip of the asset iceberg and a fraction of the personal wealth of successful Armenia's who live overseas, most of which is deposited in local banks. With large populations concentrated in places like Moscow, London and Los Angeles - pop music diva Cher is an ethnic Armenian - the locations for the first branches are pretty obvious.
The government contributed $20m to the capital of the bank, which has already been set up, but isn't operational yet. The plan was to raise another $80m from Armenians around the world. "The other half of the equation is the resources the bank mobilises and will invest into targeted projects back in Armenia. It is a way for our diaspora to take a more active role in the development of the country and at the same time earn a good return on that growth," says the minister.
However, the crisis threw a wrench into the plans, as most of the commitments - which came from both large Armenian-owned businesses and private individuals - have been put on hold after markets crashed around the world at the end of last year. "We took the bank on a road show last year and found there was a lot of support amongst the diaspora," says Yeritsyan. "However, these commitments have been withdrawn for the moment while everyone is assessing their position. But we are confident that they will return and we can push ahead as planned with the bank."
In the meantime, the government has hired head hunters to find a top quality international CEO, as the tricky bit of making a global retail bank work is that it will have to compete with high street banks in the US and UK in terms of the quality of its service. It won't be easy, but Yeritsyan is literally banking on the loyalty that Armenians feel towards their homeland to give the bank a competitive edge.
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