Archive for December 5th, 2011

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Transformation of Ukrainian banking system

December 5, 2011

Well here is a somewhat interesting statement from the President of the Association of Ukrainian Banks, Mr Olexsandr Suhoniako.

He is somewhat concerned that only 30% of all bank loans in Ukraine go into the real economy and create jobs.  He is further concerned that there are actually only three banks really lending and they are all State banks via their subsidiaries.

Why is he surprised?

The European owned subsidiaries will undoubtedly be getting milked dry by their parent EU based banks in a desperate effort to raise the necessary recapitalisation requirements as directed by the EU before June 2012.  A reduction in loans in Eastern Europe and a reduction in assets that will not count towards a base for recapitisation would seem an inevitable part of the EU parent banks strategy for their Eastern European subsidiaries.  Major deleveraging by EU banks across Ukraine must be anticipated.

In short, deposit accounts only from EU banks would seem to be the order of the day.  (In actual fact the order of the next few years one would suspect.)

I wonder how long before we see the first Chinese/Asian banks on the high streets filling the void soon to be left?

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