Page 27 - BELRptDec18

8.0 Financial & capital markets 8.1 Bank sector overview
The financial sector remains a contingent liability to the government and a potential risk for macroeconomic stability, despite some improvements. Regulatory NPLs (the three riskiest categories) have stabilised, reaching 12.8% of gross credit exposure in 3Q17 due to the improved macroeconomic backdrop leading to lower interest rates and lower exchange rate volatility.
Capitalisation levels have improved somewhat, but remain modest given high credit risks. The large presence of the public sector (65% of assets) creates fiscal risks for the sovereign due to the potential need of further capital injections, execution of guarantees and issuance of securities in exchange of loan transfers.
Belarusbank has started servicing cards issued by the Chinese payment system UnionPay , Belarusbank representatives told BelTA. ATMs and payment terminals installed by Belarusbank in retail outlets and service outlets now accept UnionPay cards. Belarusbank is working hard to enable the functionality all over the country in 2018-2019. Belarusbank has completed all the procedures to become a full member of the UnionPay system. BelTA reported earlier that Belarusbank and UnionPay International signed the agreement on launching UnionPay card service in Belarus in March 2018. UnionPay is China's national payment card system. It was set up in 2012. UnionPay cards are accepted in about 170 countries and regions of the world.
The European Investment Bank (EIB) will prove a €25mn loan to Belarusian largest state-owned lender Belarusbank and a €50mn loan to state-owned Belagroprombank with the am to support around 200 small and medium-sized companies. The EIB loans to small businesses, intermediated through Belagroprombank and Belarusbank, will facilitate investment projects and help to meet the working capital needs of private sector companies in Belarus, the European lender said in a statement on November 20. "This will contribute to the strengthening of the private sector and economic diversification that is particularly important in Belarus, where large state-owned enterprises still dominate the national economy," the statement reads. "It is estimated that some 200 SMEs will benefit from this financing, which should help to sustain over 2,500 jobs. These loans are being provided in the framework of the EU4Business initiative targeted at smaller businesses in the Eastern Partnership countries." The EIB is also going to provide a €84mn to state-owned Minsk Vodokanal (MVK), the country’s biggest municipal water utility, to finance the rehabilitation and modernisation of the capital city’s central wastewater treatment plant. The project will be co-financed by a parallel loan of the same amount provided by the European Bank for Reconstruction and Development (EBRD).
27 BELARUS Country Report December 2018 www.intellinews.com