Ukraine identifies eight systemically important banks

The National Bank of Ukraine (NBU) has identified Ukraine’s eight largest banks by assets as “systemically important,” according to a Dec. 30 press release. They include two state banks, Ukreximbank (EXIMUK) and Oschadbank (OSCHAD); two banks controlled by Ukrainian residents, Privatbank (PRBANK) and Delta Bank; two banks controlled by EU-based groups, Raiffeisen Bank Aval (BAVL UK) and Unicredit’s Ukrsotsbank (USCB UK); and two subsidiaries of Russian groups, Prominvestbank, and Sberbank Rosiyi.

These eight banks account for 53% of total assets, 52% of total client loans and deposits, and more than 55% of the interbank loans and deposits of the entire banking system of Ukraine. The NBU also provided methodology for designing systemically important banks, based on their share in Ukraine’s banking system by the above-listed parameters. Revisions to the list of systemically important banks will be made each year. The NBU also highlighted that it would design a special regulatory framework for systemically important banks, including tougher capital requirements.

Alexander Paraschiy: Gaining such status is clearly positive for the banks as it will enablethem to better promote their services in the future. At the same time, potentially higher capital requirements might become a new headache for some of them, including the biggest one Privatbank (whose CAR was 10.96% as of end-September). Its shareholders seem to have enough money to increase the bank’s capital, so tougher regulation will force them to contribute, which, among other things, will decrease risks for the holders of the bank’s Eurobonds.

For Delta Bank, whose CAR was barely above the minimum, 10.02%, as of end-September, the tougher CAR requirement will be harder to implement, given that the bank’s main shareholder is only in the process of selling some of his other assets to recapitalize Delta Bank by UAH 1.2 bln (which would increase the bank’s CAR to just 12.0%).