Axe hangs over ailing banks
Ukrainian banks that have only just begun...
Ukrainian banks that have only just begun to recover from the financial crisis of 2008-2009 are once again facing problems, according to KyivWeekly. A new wave of crisis could inflict serious damage to the financial standing of borrowers, thus triggering another wave of payment arrears on loans. Banks are under threat of sustaining serious losses due to the growth in the volume of “bad” assets and deteriorating liquidity, KW wrote.
In September, the negative financial performance results of lending institutions exceeded UAH 1 bn. The results in July, when losses of the country’s banking system reached UAH 2.9 bn, were worse. Overall, over nine months of 2011 the aggregate losses of Ukrainian banks totaled UAH 5.6 bn. President of the Ukrainian Analytical Center Oleksandr Okhrymenko believes that by year’s end losses could hit as high as UAH 7-8 bn.
To cover the cash gaps, banks will again be forced to go hat in hand to their shareholders. “The banking system needs additional capitalization in the amount of some 15% of aggregate assets (according to the NBU, as of October 1, 2011 bank’s assets amounted to UAH 1,031.7 bn – KW), which is comparable to the volume of problematic debts,” says COB of the Natsionalniy Kredyt bank Andriy Onystrat.
In the meantime, “Affiliates of European banks will experience difficulties due to the financial crisis in the euro zone. Their colleagues with Ukrainian capital may suffer from the limited resources of their shareholders as most of them are not prepared to increase authorized capital of banks. As for state-owned banks, the issue of their additional capitalization will be decided based on the volumes the budget can afford,” Vice CEO of Sberbank of Russia Oleksandr Vedyakhin forecasts.
Earlier, the Cabinet of Ministers has expressed unwillingness to continue supporting recapitalized banks. On October 31, the government bill No. 9362 was registered in the VR setting the procedure for the sale of the state’s stake in these financial institutions. Banking industry experts say further support is hopeless and if there are no buyers of recapitalized banks, it is highly likely they will be liquidated after the government has already spent UAH 28.5 bn to bail out ailing banks.