Page 44 - UKRRptAug18

Recent market concentration has increased the market share of the five leading banks up to 60% from around 35% in 2011. Large-scale M&A activity is predictable over the next 12-24 months.
Loan-to-GDP ratios are at the lowest level for 7 to 10 years at 32%
down from 80-90% in 2008/2009.
According to the NBU credit and profitability risks have decreased over the past six months . Liquidity risk remains low. The inflow of Hryvna funds remains stable at 15% y/y with customer funds providing over 80% of banks liabilities. GDP growth is estimated 2.5% in 2018 with 3% forecast for 2019.
Ukraine’s parliament, the Verkhovna Rada, has approved new principles of the supervisory board formation for state banks . Specifically, the adopted document stipulates that the supervisory board of a state bank should consist of nine members, of which six are independent and three are nominated by the president, cabinet and parliament. The position of the board’s head can be only occupied by an independent member. The selection of independent board members is performed by an agency with at least ten years of international experience of a bank executives search. Independent board members are chosen by a commission consisting of three representatives of the cabinet, one of the president and one from parliament.
Ukraine's parliament, the Verkhovna Rada, has approved a law in the second reading, which removes some legislative loopholes undermining the rights of creditors.
The same day, the National Bank of Ukraine (NBU) welcomed the motion that was among the priorities of the NBU and the government for 2018.
According to the NBU, the full-scale resumption of lending is blocked by a number of gaps in the applicable law of Ukraine that are holding back the performance of Ukrainian banking sector.
"The gaps include, inter alia, surety procedures that do not work in practice and are a formality, complex and risky mechanism for determining the variable interest rate, shortcomings in out-of-court instruments, and a set of provisions that entail the risks of collateral withdrawal despite obligations under a loan agreement," the regulator said in a statement on June 3.
Approval of the law will resolve issues that cause "systemic hurdles for lending resumption in the domestic economy and generate additional risks for domestic and foreign investors", the central bank believes. "Once the creditors’ rights are protected, banks can loosen requirements to potential borrowers. This will fuel an active use of lending as a financial instrument, reduce the cost of credit resources, and respectively improve accessibility of banking products for business entities and individuals," the statement reads.
According to Kyiv-based brokerage Concorde Capital, the law stipulates minor changes in other laws aimed at improving creditor protections in various cases.
44 UKRAINE Country Report August 2018 www.intellinews.com