Savings, brokerage accounts in Armenia allow investors to help build the economy, earn returns

An interview with Cascade Capital CEO Jonathan Stark

by Vincent Lima

Published: Saturday January 26, 2008

Jonathan Stark . Armenian Reporter / Armenian Reporter

Jonathan Stark is the CEO of Cascade Capital Holdings. The company is wholly owned by the Cafesjian Family Foundation, with which this newspaper is affiliated. He spoke to Vincent Lima on January 21.

Vincent Lima: We ran an editorial last week saying that Armenia is welcoming investors with open arms. Embrace it. What we didn't say is how readers can go about doing that. Tell us the about the possibilities.

Jonathan Stark: For the last 15-20 years, Armenia has been recovering from the devastating effects of the earthquake, the breakup of the Soviet Union, and the Karabagh conflict. During that period, charitable contributions from the Armenian diaspora played a major role in Armenia's survival.

In the last ten years, the time I've lived here in Armenia, the situation has improved. The evidence is all around us. The improvement is reflected in the recent Heritage Foundation report [featured in last week's Reporter, page A1]. The Millennium Challenge Corporation has advanced Armenia into the next highest category - from low-income to lower-middle income.

There's enough empirical evidence out there from reasonably neutral third parties to suggest that yes, all the indicators and signs show that Armenia's economic situation is getting better. And it's a regional issue as well. You see Georgia, you see Azerbaijan: their economies are becoming stronger. And they should be. We happen to be going in the right direction.

To continue moving forward, Armenia will need even greater investments in its economy. Now the Armenian diaspora has an additional potential role to play in Armenia: that of investor.

Many individuals that would like to invest in Armenia's future do not have the time and energy, nor the people and resources on the ground in Armenia, to feel comfortable making investments.

One of the goals for Cascade Capital Holdings was the creating of a financial services company that could assist the Armenian diaspora with investments into the Armenian economy. We want to let small and large potential investors know that there are investment vehicles in Armenia that they can trust. There are trustworthy stewards and intermediaries, like Cascade, for your finances.

Cascade Investments offers investors the opportunity to buy and sell a variety of local securities. State securities and quality local bond issuances are yielding 9.5 to 10 percent per annum. Deposits at Cascade Bank yield up to 8 percent.

Cascade Bank lending programs

At Cascade Bank, we work hard to attract and serve entrepreneurs engaged in growing businesses, together with their families and employees. Small and medium enterprises drive the largest share of job growth, and we want to be there to help.

Cascade Bank is a small bank with tremendous opportunity for growth. In the last six months, we've doubled our loan portfolio. We've gone from 2 to 4 billion drams, which is $12-13 million in today's money. Our target is to double that again in 2008.

We've been quite innovative. Cascade Bank introduced some specific women-oriented products a few months ago, offering discounted loan rates and other programs tailored to women.

In the mortgage market, Cascade Bank is offering some of the lowest rates and longest repayment periods. We have made a special effort to appeal to new families under the age of 35. Our programs are having a positive impact on the market, as other banks and institutions are reducing their rates and increasing their repayment periods. We've got at the moment something like 40-45 new applications in process, probably 8-10 new applications a week for this SME [small and medium enterprise] and mortgage lending. Our average loan size is around $40 thousand.

Lima: Mortgage or business loans?

Stark: Both.

Folks in Armenia face many challenges. Finding secure, reliable financing for the purchase of a home or the expansion of a business is one of them. We work hard to identify and work with customers that are committed to Armenia and to its future.

We work hard to provide better customer service. We try to treat our employees well. We invest in people and resources. We have zero tolerance for corrupt practices. We have found this to be a successful formula.

Cascade has been adding customers - growing by almost 70 percent in 2007. We doubled the loan portfolio; we've doubled the deposits in the bank. And our deposit rates are not the highest in the market.

Ten years in Armenia

Lima: Let's talk about you, Jonathan, for a moment. You came here 10 years ago, obviously not with Cascade, since it started in 2004.

Stark: No, no, I came here with HSBC. I started in the insurance business in 1976; I'm going to be 50 in February. I came here in 1998, having done 22 years in Lloyd's of London. HSBC, who had a bank here, were looking to set up an insurance company and sent me. So it was a significant change, on a personal basis, from dealing largely with Greek shipping.

Before arriving in Yerevan, I spent time in the Mediterranean, Aegean, and Eastern Europe; I got up into Russia in ‘91, started working in the Baltics in ‘92, went through all of those Eastern European countries that had any kind of trading and shipping orientation. I worked for a while with some folks in Istanbul. Spent time in Athens, some in Cyprus, so I knew this area fairly well, having grown up fascinated by it.

Growing up in Great Britain 40 years ago, we were taught to be afraid of the folks on the other side of the curtain. Folks would say, "when you see the big white flash, hide under the bed, hide under the desk. The evil people in Eastern Europe are going to drop bombs on us." And of course, we have come to learn that people in Eastern Europe were told exactly the same thing about us. So it's always been a fascination for me - to interface, to be able to cross that divide.