Middle-week thoughts: "Shahtar" resounding victory - is Ukraine's economy "hoisted ti the surface"?

Tags: Yevhen Pentsak, crysis, IMF, investor, liquidity, investment, banking system, NBU

Regrettably, “Shachtar”‘s outright success did not signal a victory in the play grounds of Ukrainian market indices and SDS. Nor did it eventually help reduce percentage of problem bank credits. Possibly, that’s why subsidiaries of overseas banks have put their shares for sale and raised pressure on corporate debtors.

On May 19th Kyiv-Mogilans’ka Business School hosted key market players in banking for round-table talks held under the motto “INSPIRING TECHNIQUES: UP-TO-DATE BANKING PATTERNS”.

The event was attended by Olexandr Volchkov (“Index Bank” Deputy Chief of Board of Directors), Viktor Gorbachov (” Raiffaisen Bank” Deputy Chief of Directors), Olena Dmitrieva (“Ukrgazbank” Deputy Chief of Directors), Eric Nhaiman (“Ukrsotsbank” Head of Financial Services Dept.), Olena Popova (“Delta Bank” Board of Directors Chief).

The talks were moderated by KMBS Dean Michailo Kolisnik.

I took floor on the world banking system problems and contemporary patterns in banking business.



The bankers shared ideas on the subjects of common interest and the following issues were raised:

  • 49% of public in Ukraine do not trust their banking system;
  • 60% of the above 49% are at the moment considering real estate purchases, presumably at lowest possible price level;
  • UAH17 billion sit at correspondent accounts, deposits reserve fund equals to UAH3 billion, whereas overall deposits amount still remains UAH100 billion;
  • Massive reformatting is expected the mentioned line of business;
  • National Bank is strongly welcome to elaborate a system of conversion short-term deposits into the sources of long-term financing s within the banking community;
  • It’s a long time before the banking crisis shall have run its course.

In my opinion, banking is for good measure akin to any other kind of business. Therefore, a number of costly blunders should be admitted that bankers and the relevant regulatory body have made. The regulator had not managed to prevent liquidity squeeze, either. The state aid should not be streaming solely to the banking system. Manufacturing cannot be deprived of good care, either, and export-oriented industries’ recovery should hopefully be secured. Mere assuring the banks of access to liquidity will not suffice for their learning a lesson out of the recent financial crisis and will not sustain them form reckless credit policy.

The bankers’ community was also unanimous as to major factors that are causing bank system disruption. Endless chase for the borrowers, careless credit-risk taking, inefficient credit portfolios, excessive bad mortgages, cases of unethical and immoral management behavior in some of the banks, - all that has resulted from inadequate pace of implementing advanced techniques into banking, and lack of risk-management expertise in many of the banks. International financial groups encounter difficulties with self-recapitalization, too. I.e. Swedbank and OTP Bank keep reducing their investments into Ukraine.

“European Commission” appeared to have issued a regulation for the banks that are subject to EEC jurisdiction and have got aid from their parent banks restricting their capabilities to allocate investments in countries most heavily suffering from financial crisis”.

No wonder that international banking institutions raised pressure on corporate debtors in Ukraine -. they are strongly opposed to long-term debt restructuring and insist on immediate repayment of debt loan interest. IMF confirmed its pessimism as to perspectives of Ukraine’s banking sector.

Yesterday, I paid a visit to the 1st International Business Opportunity Forum (Ukraine: Wise Investment Policy. Challenges and Opportunity) and shared my view of Ukraine’s economy perspectives and principles of wise investment best suiting the current period.

We have to definitely become more knowledgeable of modern IT back up to Ukrainian’s business efficiency as well as its financial system at large. We require a better business environment which is achievable through sincere community spirit and state proponing activities. “Shahtar” has scored its victory. Ours is still to be pulled off.


See also:

Мысли среди недели:путь к спасению мировой экономики

Последние события на мировых фондовых рынках заставили задуматься, как близко мы стоим к краю мировой экономической пропасти. События 11 марта 2011 года, 4 августа 2011 уверенно указывают на то, что депрессивное десятилетия начала третьего тысячелетия будет иметь еще более депрессивное продолжение. Движется ли мир в хорошем направлении во всех смыслах слова «добрый»? Может долго держаться макияж, если наносить один слой пудры за другим?

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