You're reading: NBU says state-owned banks’ strategy should be reviewed

The National Bank of Ukraine (NBU) in general positively assesses the strategy for reforming the state-owned bank sector drawn up by the Finance Ministry, but the central bank said that some provisions of the document should be reviewed.

Deputy NBU Governor Kateryna Rozhkova said that the solving of the issue of increasing operation effectiveness of state-owned banks is important for the successful implementation of the strategy and gradual withdrawal of the state from the banking market.

“Here we see Augean stables today where a lot of work should be done,” she said at a roundtable organized by the Center for Economic Strategy in Kyiv on March 5.

Another issue that requires, according to the National Bank, to be solved is the need for additional capitalization of state-owned banks to achieve strategic goals and the expected return on additional capital.

“Those calculations that we saw, they are not optimistic. We have questions… If we are talking about privatization or partial privatization and commercialization of state-owned banks, then we must separate a social function from the state-owned banks, otherwise it will be a bottomless sea where you can pour in and inject capital, and at the same time not to get any effect,” she said.

At the same time, Rozhkova said that at present state-owned banks do not need capitalization from the point of view of the implementation of prudential standards.

“Tests conducted throughout the banking sector, including state-owned banks, revealed problems, and these problems are old. They were reserved, the capital was injected to secure them,” she said.

According to the estimates of the National Bank, another important issue demanding solution is also the issue of financing state-owned strategic enterprises and state monopolies.

“Today, we, the NBU, do not see a solution to this issue. Instead, we see an increase in financing of state-owned enterprises through state-owned banks, which leads to violation of these standards by banks, like loans in one hand,” she said.