Cabinet seeks to transfer bad assets to state bank

Yesterday Prime Minister Yulia Tymoshenko, at a press conference, said that the Cabinet of Ministers is working to transfer the assets and liabilities of problematic banks to state-owned banks and then is looking at liquidating these trouble banks, Interfax reported. Tymoshenko said the proposal was approved at a Cabinet meeting yesterday. Tymoshenko also said the Cabinet was planning to ask the National Bank of Ukraine to replace the temporary administrators at Nadra and Ukrprombank (and not at the 12 other lenders under its control) as a prerequisite for recapitalization assistance from the government. Tymoshenko said the Cabinet submitted nominations for potential replacement candidates. In the open letter, Tymoshenko said this scheme was likely to be used on the next troubled bank in line for the state’s attention – Ukrprombank. Tymoshenko said there are currently no plans for dealing with Bank Nadra (NADR) or any of the other 12 banks under the NBU’s temporary administration. Mykyta Mykhaylychenko: While Tymoshenko’s proposal lacks details, the general idea of transferring assets of questionable quality and liabilities to supposedly more healthy banks (state-owned banks in this case) could worsen the latter’s financial conditions and, therefore, does not look like the best solution to the problem.