3rd-year student, sp. “Accounting and Auditing”, d/d, Scientific Advisor – Stupak M.H., Chernivtsi Trade and Economics Institute of KNTEU, Chernivtsi
SOME VITAL PROBLEMS OF UKRAINE’S BANKING SECTOR
The problems of investment opportunities and searching the sources of financing are of vital importance for Ukrainian banks. Those banks that were able to answer these two questions proved to be successful and managed to develop their business even in difficult times. However, both the availability of funding and ability to invest profitably and with manageable risks, are more and more impacted by both the state of the domestic economy and the global trends. Ukraine’s banking sector managed to survive the 2008-2009 crisis with support from foreign shareholders who invested billions of UAH to maintain capital adequacy of their Ukrainian subsidiaries and from the National Bank that pumped in funds to restore liquidity [2]. However, Ukraine’s exposure to global financial markets becomes more of a concern now, when the country’s gross external debt, including both public and private debt, had risen from 57 percent of GDP before the outset of the 2008-2009 crisis to 79 percent of GDP now and totaled USD 130 billion [4]. Therefore, Ukraine is now much more sensitive to problems with international liquidity than it was back in 2008. The government had planned to raise substantial amounts of money through Eurobonds in 2012, but the Eurobond market has just closed for Ukraine and it is not likely to re-open soon. The IMF program is also not moving as was earlier expected. With fragile signs of recovery in the country’s economy, banks started to build plans for expansion in the beginning of 2011. Many banks announced aggressive growth plans, and the first half of 2011 saw excess liquidity and lack of eligible borrowers to lend to [3]. During the first 9 months of 2011 loans to corporate borrowers increased by only 13 percent and loans to individuals declined by 3 percent. Growth in corporate lending was mainly attributable to three groups of banks – the state-owned Oschadny Bank, Ukreximbank and Ukrgasbank, two banks owned by Ukrainian oligarchs – Privatbank and First Ukrainian International Bank and three Russian-owned banks – Prominvestbank, VTB bank and Sberbank. Other banks were much less aggressive in lending and continued to work on their delinquent portfolios. Nevertheless, in spite of difficulties‚ Ukraine has a long way to go, and clearly it needs to move quicker than others. The banking system of Ukraine has to proceed step by step in its evolution towards the stabilization of its role in the society and economy. It is obvious that without banks that are stable, sound and powerful, all economic reforms in Ukraine will not be effective. Selected bibliography: 1. http://advisors.com.ua/en/publications/show/28 2. http://en.for-ua.com/news/2012/06/06/134449.html 3. http://finance.mapsofworld.com/economy....or.html 4. http://info.ua.net/guide/51.html
