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bne June 2019 Companies & Markets I 15
profits into their capital, which allows them to retire bad debt, increase lending and earn their way out of the hole the sector fell into in recent years.
Corporate lending still dominates the loan portfolio of banks. The retail lending boom that drove growth in most of the other CIS countries in the last decade has yet to happen
in Ukraine. Moreover while there was a mild increase in lending over the first quarter of this year, the overall trend in both corporate and retail lending remains more or less flat. Corporate loans amounted to UAH936bn ($35bn) in April and retail loans to UAH207bn ($7.8bn). With a low loans/ deposit ratio of 88.1% in March the banks have a lot of room to grow their lending business.
At the same time the NBU has won kudos for its independent and tough stance on reforming the banking sector. The central bank has continued to close wobbly and dodgy banks and the health of the sector as a whole has been improving as a result.
The number of banks continues to fall and dropped to
77 in total, including 36 with foreign capital (and 23 with 100% foreign capital) from 82, 39 and 18 respectively
a year earlier.
Ukraine corporate NPLs and retail NPLs UAH mn
Ukraine central bank
loses appeal in PrivatBank nationalisation court battle
bne IntelliNews
The National Bank of Ukraine (NBU) has lost an
appeal filed to the Sixth Appellate Administrative Court against May's ruling of the Kyiv District Administrative Court that satisfied a lawsuit filed by the Cyprus-based company Triantal Investments Ltd, controlled by Ihor Kolomoisky, the former co-owner of the nation's largest lender PrivatBank, nationalised in late 2016.
"The NBU does not agree with the court’s ruling and intends to file an appeal in cassation," the central bank said on May 13.
The possible de-nationalisation of Privatbank is a major problem for Ukraine as the International Monetary Fund (IMF) has indicated it could suspend its Stand by agree- ment (SBA) lending programme if the bank is returned to its former owner. And without the IMF money Ukraine would be unable to meet its debt obligations this year and thus faces yet another crisis.
The NBU appealed against the court's ruling to declare illegal the regulator’s decision to inspect PrivatBank before its nationalisation.
"The NBU had grounds to inspect PrivatBank in 2016, as the bank had failed to implement the financial rehabilita- tion program agreed with the bank’s shareholders and management," the statement reads. "This is confirmed by the written statement by the bank’s former shareholders and is proof that they failed to meet their commitments."
The regulator added that the inspection of PrivatBank before it was declared insolvent and its government- assisted resolution revealed that the bank failed to imple- ment its restructuring plan and that the bank’s capital was insufficient to meet the required capital and credit risk coverage ratios. "This conclusion is supported by the paperwork from the inspection and by an independent, internationally recognised audit firm hired by PrivatBank."
The NBU said it will continue to prove the legitimacy of
its actions. "Such court rulings pose a threat to Ukraine’s financial stability, the NBU believes," the statement reads.
Ukrainian President Petro Poroshenko has warned that possible "backsliding" will cause a deep economic crisis both in the country and in relations with international financial organisations.
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