Page 32 - BELRptFeb19

8.0 Financial & capital markets 8.1 Bank sector overview
The financial sector remains a contingency 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.
The European Bank for Reconstruction and Development (EBRD) has arranged a €50mn syndicated loan for Belarusian state-owned Belinvestbank with the aim to credit local small businesses, the multinational lender said in a statement on December 10. A three-year syndicated loan of up to €50mn consists of an 'A Loan' of up to €15mn provided on the bank’s own account and a 'B Loan' of up to €35mn to be provided by several international lenders from Germany, Luxemburg, Portugal, Switzerland and the USA, which have shown significant interest in the transaction.
No progress has been made in the effort to privatise the Minsk-headquartered state-owned Bank Moscow-Minsk (BMM) despite previous statements of the European Bank for Reconstruction and Development (EBRD) that its sale could be secured by the end of 2018. Kallaur indirectly confirmed the lack of will of the Belarusian government to privatise BMM and any other state-owned assets due ban imposed on privatisation by the country's authoritarian president Alexander Lukashenko.
The European Bank for Reconstruction and Development (EBRD) says it intends to buy out the state share in Belarus’s leading commercial bank Priorbank in the first quarter of this year, BelTA learned from the head of the EBRD representative office in Belarus Alexander Pivovarsky. “A session of the EBRD Board of Directors will be convened soon to discuss the matter. I hope we will finish the deal by the end of the first quarter,” Pivovarsky said. The EBRD intends to buy a minority stake in the bank which is majorty owned by Austrian banking giant Raiffeisen. At present Raiffeisen CIS Region Holding GmbH owns 87.74% of Priorbank's charter capital. The State Property Committee owns 4.61%. As much as 1.28% of the charter capital belongs to OAO MAZ, the managing company of the holding company BelavtoMAZ. The rest is owned by other corporations and individuals.
8.2 Central Bank policy rate
Belarus left the key rate left unchanged on December 20 as the regulator sees rising inflation pressure as temporary. Bankers were expecting that the National Bank of the Republic of Belarus (NBRB) would start tightening monetary policy, but it chose not to.
32 BELARUS Country Report February 2019 www.intellinews.com