21 October 2014
The National Bank of Ukraine (NBU) estimates the total recapitalization needs of the three state banks at UAH 12.5 bln, which the State Savings Bank (Oschadbank, OSCHAD) requiring the most, NBU Deputy Head Oleksandr Pysaruk told journalists on Oct. 20, as sited by the Ekonomichna Pravda website. A month ago, the NBU declared that nine of 15 biggest Ukrainian banks might demand a total UAH 56 bln capital injection over the next three years, as the results of their stress tests had showed.
Alexander Paraschiy: Each of the three state banks has CAR of over 22% as of end-1H14, and the government’s strategy is to keep their CAR at above 20% (compared to the minimum allowed level of 10%, according to local legislation). To keep this ratio that high, the central bank may indeed feel a need to recapitalize some of the state banks, most likely Oschadbank (22.8% CAR as of end-1H) and Ukrgazbank (22.8% CAR as of end-1H14). The third state financial institution, Ukreximbank (EXIMUK), had end-1H14 CAR of 26.2%.
Recall, Oschadbank disclosed last weekthat its net loan portfolio remaining in occupied Crimea amounts to UAH 6.3 bln. Writing down this portfolio (which, we believe would be logical) would decrease the bank’s CAR to below 20% and might foster an additional capital injection from the state. Clearly, such an outcome would improve Oschadbank’s liquidity and its ability to smoothly service all its obligations.