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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) is attracting new financial institutions to its local currency lending initiative in Belarus launched in August . The latest bank to join the programme is Priorbank, which has maintained its long-term relationship with the EBRD since 1996. The lender will receive a three-year loan of up to $15mn (in BYN equivalent) for on-lending to small and medium-sized enterprises (SMEs) across Belarus. In August, the EBRD provided first-ever local currency loans in Belarus to local lenders Minsk Transit Bank (MTBank) and Belarusky Narodny Bank (BNB-Bank) for on-lending to small and medium-sized enterprises (SMEs) across the country. MTBank and BNB-Bank will each receive credit lines of up to $10mn in BYN equivalent , the EBRD said in a statement on August 30.
30 BELARUS Country Report November 2018 www.intellinews.com