The last year was very difficult for Ukraine.

Now the economics of Ukraine is in the deep

recession, which influences on national banking system.
Banking system of Ukraine suffers from
currency exchange rate instability, assets loss
in Crimea and in the Eastern anti-terrorist
operation (loss of more than 15% of banks
assets and liabilities), reduction of clients
credit capacity, general personal shortage and
defaults of financial institutions. The massive
outflow of population fixed deposits amounts
to 10 billion in foreign currency and more than
40 billion in hryvnia.
Over the last 13 months banks, which
previously controlled 13,5% of the population
deposits market and 13,9% of banking assets,
were recognized insolvent.
National Bank of Ukraine began active
refinancing of commercial banks. Nevertheless,
refinance was given only for loyal banks and
banks of closely held parties from the current
authorities.
Unofficial estimation showed that level
of bad debts in the baking system exceeded 50%.
International agency S&P in September of 2014 placed Ukraines banking system in the
group of highest risk. It is connected with negative market conditions observed through the whole
2014. Also, due to the expectations, key challenges against Ukraines banking system remain the
same, some of them have a tendency to accelerate. The main challenges are:
- Asset quality deterioration (especially of loan
portfolio). It is provoked by the decreasing of
GDP and worsening of borrowers financial
state, hryvnia depreciation and foreign
currency loan prices escalation;
- Liquidity deficit and limited access to longterm resources. Level of deposits in national
and foreign currencies is decreasing, market of
internal and external loans are closed. The
only source of financing is NBU refinancing,
but it is also limited;
- Capital deficit. The results of stress-testing
show that the largest 35 banks need more
than 66 billion UAH, so there is a huge capital
deficit in Ukraines banking system, and in
2015 it tends to increase.

Due to institute of economics research and political

consulting surveys, the main obstacles for the banking
business in Ukraine are adverse economic and political
situation. Also, adverse regulatory climate influences
negatively on the banking in Ukraine.
Other factors highlighted by the banks-respondents
are world adverse economic situation, tax burden, low
demand, competition in sector, adverse regulatory climate.
During the 2014 NBU removed 33 commercial banks
from the market, which is almost 20% of all financial institutions of the country. 17 banks lost their
licenses and began process of liquidation, 16 banks are functioning under the temporary
administration.
With the aim of estimation of banks stability rating was elaborated. This rating includes
such factors of stability as compliance of assets and statutory capital, bad debts, owners support
and risks, return on equity, liquidity, continuity of payments, system importance of the bank. Due
to this rating, the most stable banks (A-category) are: Credo Bank, Credi Agricole bank, City Bank;
B-category: Ing Bank Ukraine, Ukrsibbank, OTP bank, Oshadbank, PUMB, VTB bank, Raiffaizen
bank Aval, Megabank, Ukrexim bank, Unicredit bank, Privat bank, Fidobank, Pivdennyi, Universal,
Ukrgaz, Sberbank; C-category: Prominvest, Diamant bank, Chreshatic, Kyiv Rus, Credit Dnipro
bank, Alfa bank, Ukrinbank, Platinum; D-category: Finance and Credit, Delta bank, Rodovyd bank,
Finansova iniciatyva, Zlatobank. This rating shows that the most stable banks in national banking
system are banks with foreign capital and system banks from the group 1.
Stability of system banks and the whole banking system are interconnected. Situation in
Ukraines banking sector is possible to be improved by stabilization in real economic and
reconciliation of military conflict in the East of Ukraine. Another huge factor influencing on
banking system stability is support and financing from the side of international financial
organizations, it influence on general macroeconomics indexes of the country, NBU reserves,
stability of exchange rate, ability of the NBU to support commercial banks. Other factors are
effectiveness of working with bad debts, ability of banks owners to invest additional capital, ability
of system banks to adapt their business-models to the new reality of economics and business.
To sum up, the situation in Ukraines banking sector is unstable and risky, but there are
internal and external possibilities of improvement.
Sources:
1. Official web-site of National bank of Ukraine http://www.bank.gov.ua
2. Web-site of Ukraines government statistics http://www.ukrstat.gov.ua/
3. Deloitte
Ukraine,
expert
article
http://www.deloitte.com/view/uk_UA/ua/46948/expert/755c577a2020b410VgnVCM1000
003256f70aRCRD.htm
4. Forbes Ukraine, rating http://forbes.ua/ua/business/1388299-rejting-zhittezdatnostibankiv-2015
5. Institute
of
economic
and
political
consulting,
expert
thought
http://www.ier.com.ua/ua/publications/comments/?pid=4689