BNP Paribas Ukraine unit to cut loans
By an estimated 20 percent
Ukraine`s UkrSibbank said on Tuesday it will trim its loan portfolio by an estimated 20 percent this year to offset the impact of rising loan losses, and increase its share capital by a third to boost liquidity, Reuters reported.
The country`s fourth largest bank, which is controlled by France`s BNP Paribas (BNPP.PA), said some 10-12 percent of its loan portfolio was problematic, though the local hryvnia currency has weakened since that estimate was made.
About 60 percent of bank lending in Ukraine is in foreign currency, mostly in dollars, which offers much cheaper rates.
But borrowers, which include not just corporates but a large number of Ukrainians paying for cars or homes, have seen their repayments soar as the hryvnia has fallen.
"In 2009, the credit portfolio will naturally be decreased. This is the trend of the Ukrainian economy ... and we are following it," UkrSibbank Chairman Sergiy Naumov told reporters.
"There will be 20 percent (of the credit portfolio in 2009) paid off ... We will have to restructure part of the long-term debt, especially that in foreign currency," he said.
Analysts have expressed little concern about Ukrainian banks, especially those controlled by foreign companies, but many expect restructuring or default among corporates, especially on foreign currency debt.
The hryvnia lost half of its value last year and in the past few days slipped again to trade at about 9.2 to the dollar, not far off December`s historic lows of 9.5-10.
"I think about 30-40 percent of the entire (lending) portfolio will be restructured," Naumov said. His comments mirrored that of Hungary`s OTP unit here.
He said up to 12 percent of the portfolio was problematic, though that estimate was based on rate of 8 hryvnias to the dollar.
"We all know that the stronger the (dollar) grows, the worse and worse the situation will be," he said.
The bank said its shareholders will increase UkrSibbank`s charter capital in April by a third - or 1.275 billion hryvnias ($165 million) - to 5.28 billion hryvnias ($686 million).
Naumov also forecast deposits should rise by 20 percent this year, as Ukrainians rush to trusted foreign brands.