Ukrainian financial institutions will get larger next year experts are saying

10:25, 22 December 2009
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Experts were...

According to the press release passed by Gorshenin Institute to UNIAN, such were the results of the expert opinion survey carried out by Gorshenin Institute.

Experts were speculating whether we are looking at a new wave of mergers and acquisitions of banks, insurance companies and other financial institutions in Ukraine after the presidential elections.

Anton Usov, leading expert with the European Bank of Reconstruction and Development stated that it is hard to make a prognosis regarding the probability of the new wave of mergers and acquisitions of financial institutions next year. “It is hard to say because the system is not in such bad shape as we predicted. Even earlier this year we thought that the situation would be much more dramatic. On the other hand, according to the experts it is naïve to assume that the financial crisis is over in Ukraine, since the number and size of problematic loans, big part of which being in foreign currencies, remain rather high. That’s why it is very difficult to say with certainty how the situation will unravel next year.”

According to the expert it is possible that the banks will get bigger next year. The problem is that the bank are still not playing their major role, they are not giving loans to industries. Naturally largest banks have better chances to stay afloat and become successful. Those banks that got subsidies. “It is unlikely that these banks will be seeking mergers and acquisitions opportunities they now have certain tasks to achieve and obligations to fulfill. As to smaller banks, let’s look at the neighbors - we are probably facing some kind of medium/long term consolidation of the system.

But again I am not talking about 2010 – Mergers and Acquisitions only happen when the microeconomic financial situation is more favorable”, added the expert.

Mr. Usov does not exclude the possibility of mergers of necessity among the banks in the middle and at the end of the list of the first hundred. “Some banks will be liquidated some banks will grow. But I don’t think this is a next year prospective. We have a number of other issues that the system will need to focus in the nearest future. First of all they need to concentrate on improving the quality of their assets, managing problematic loans and rebooting their main functions”.

UPEC’s President Anatoliy Girshfeld thinks that the environment for the new wave of mergers and acquisitions in Ukraine is already here. Financial institutions in Ukraine do not serve their purpose and turned for the most part into cashiers. “Basically they are not in a position to function as classic financial institutions they do not give loans to industries or individuals. The crisis only proved that. The government needs to come up with a new strategy and create such environment for mergers and acquisitions that they won’t have negative impact on the population. This is a technical matter. And all these changes need to happen within the next year, without them the economy won’t pick up”.

Head of the Ukrainian State Committee for Regulatory Policy and Entrepreneurship Alexandra Kuzhel’ does not exclude the probability of the new wave of mergers and acquisitions of financial institutions. “In any case there will be changes. But the National Bank’s policies are very shady and we learn from alternative sources that there is a list of banks that are facing bankruptcy, so those will probably merge and a realistic way to save them”. In that regard she mentioned “Nadra Bank”. According to Mrs. Kuzhel’ she’s getting a lot of correspondence from business people that they have paid their taxes, the funds were taken out of their accounts and yet they never arrived anywhere. “The bank is within the Government management and we can’t even go anywhere with the claim. But we are hopeful about the changes, with the banks but also with insurance companies and credit unions. And let’s call it voluntary merging for the sake of survival rather than acquisitions”, Mrs. Kuzhel’ said. 

The President of “Oranta”’s Supervisory  Board Oleg Spilka  thinks that mergers and acquisitions of financial institutions will be happening in Ukraine soon for two main reasons. “First of all this is a way out of crisis which usually creates the perfect momentum for such transactions. Second – presidential elections, we are certain to witness redistribution of wealth after the elections”, thinks the expert.        

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