Central bank forecasts no mass bankruptcies in Ukrainian banking sector

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Nov. 23, 2009, 9 p.m. | Ukraine — by Interfax-Ukraine
There will be no mass bankruptcies in the Ukrainian banking sector, forecasts Vasyl Pasichnyk, the acting vice governor of the National Bank of Ukraine (NBU). "The number of banks where a provisional administration will be introduced will not grow much in the near future, and there will be no mass bankruptcies," he said at a meeting of the financial press club arranged with the information partnership of the Dzerkalo Tyzhnia (Mirror Weekly) weekly newspaper in Kyiv on Monday.

However, Pasichnyk did not rule out that the NBU might introduce a provisional administration at some banks that do not fulfill capitalization programs developed following diagnostics and agreed with the NBU.

He also said that the share of bad loans in the banks' loan portfolio had increased to 8% since the beginning of 2009.

"We cannot say that the situation in the banking sector has considerably improved. We can say that the pace of decline is slowing rather than increasing. The share of bad loans at banks has increased to 8% since the year's start. If one speaks about the private sector, the share of individuals' bad loans has increased to 6%. This is almost twice as high compared to the beginning of the year," he said.

Pasichnyk said that the banks are sustaining losses and have formed considerable reserves against credit risks, which limits their lending abilities.

He also said that 14 out of the 17 banks with a provisional administration are holding talks with potential investors.

"At the same time, not all the investors duly assess their potential, and this has been dragging out the negotiation process a lot..." he said.

According to Pasichnyk, 12 Ukrainian banks are undergoing liquidation. A decision on liquidation was taken at four of them this year.

As of October 1, 2009, there were 182 operating banks in Ukraine, according to the NBU.
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