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The main challenge for such financial institutions is the lack of a development strategy, the banker said.
First Deputy Governor of the National Bank of Ukraine (NBU) Kateryna Rozhkova says an analysis of 40 medium- and small-sized banks in Ukraine shows that business models of more than 20 of them are unviable.
"Unfortunately, the estimates of more than 20 financial institutions, among the 40 medium- and small-sized banks, were unsatisfactory. For the time being, the main problem for small banks remain the lack of a development strategy and, as a result, the inviability of the business model. Another important issue is the source of funds to support the banks' capital," the NBU's press service quoted Rozhkova as saying on February 4.
According to the official, the evaluation of banks within the SREP (Supervisory Review and Evaluation Process) included an analysis of four major components: business models' viability and sustainability, quality of corporate governance, as well as capital, and liquidity risks.
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Rozhkova says, upon completion of the assessment, the regulator will separately discuss with each bank the strategy and vision for further operation in the financial sector.
"Today, the financial sector is becoming increasingly technological, and some non-banking institutions offer affordable services to customers via the introduction of the latest technology solutions. We have repeatedly stressed three main ways for small banks which have no strategy and vision for their further development, namely improving the efficiency of their business models, consolidating and merging with other banks, or voluntarily giving up their banking licenses," Rozhkova added.
UNIAN memo. As of January 1, 2019, the number of solvent banks that have a license to conduct banking activities in Ukraine amounted to 77 financial institutions.