Bank Khreschatyk (Kyiv), in which temporary administration was introduced on April 5, needed to radically change its business model, the deputy head of the National Bank of Ukraine (NBU), Yekateryna Rozhkova, has said.
“The first thing we saw that fundamental changes throughout the bank’s business model were required. It was to attract deposits from the population and public utilities and finance persons related to the bank’s shareholders. The bank did not provided lending to individuals though positioned itself as a bank for Kyiv residents. The NBU has been demanding the bank review its business model and cover risks with additional capital for more than a year,” Rozhkova wrote in the article in the Ekonomichna Pravda (Economic Truth) edition.
According to her, problems in Bank Khreschatyk have piled up over the past decade.
She added that the bank often credited the companies of its private shareholders under unfavorable conditions.
“Khreschatyk issued long-term loans to the shareholders’ companies at low rates. Most borrowers of the bank and issuers of securities, which Bank Khreschatyk bought, have never generated cash flow sufficient to service loans borrowed from the bank. And the rates on loans were often lower than the rates on deposits, which Khreschatyk attracted from the public. In other words, the bank did not earn money: on the contrary, since the middle of 2014 it posted interest loss that completely contradicts all logic of banking business,” Rozhkova said.
