Yekaterina Trofimova, S&P`s analyst for banks in
the former Soviet Union, said the credit crunch had left Ukrainian
banks in the lurch, and the central bank had limited means to help
because of the conditions for its $16.4 billion IMF loan.
The
majority of banks in Ukraine need additional capital either linked to
the fact that their real economic capital is already negative, or
because the quality of their assets is deteriorating," Trofimova told
Reuters.
She did not state the banks that S&P considers to be struggling, or how much recapitalisation the sector needed.
"Mergers
among banks could be one of the ways of solving the problem of a lack
of capital, but we have not seen any active moves for such deals,
particularly from solid banks," she said.
The lack of mergers was
linked to "uncertainty over the market, uncertainty in the future and
fears of skeletons in the cupboard, including hidden costs which often
occur after a merger or acquisition", she said.
There are more
than 180 banks in Ukraine, the sector experiencing rapid growth in
recent years, although no single bank has more than 10 percent market
share.
Foreign lending helped credit sector to develop, with
Ukrainians borrowing for the first time in their lives to buy homes and
cars.
Banks` lending portfolios rose more than 70 percent in
2008. Foreign currency lending amounts to 59 percent of all credit, up
from 50 percent at the start of 2008, and is worth 433.8 billion
hryvnias ($56 billion), central bank data showed.
Many Ukrainians
borrowed in dollars, because interest rates were lower than
hryvnia-denominated loans as inflation soared. The strategy backfired
when the hryvnia fell sharply in the last four months of 2008, making
the loans far more expensive.
Now there are fears of default.
"Careless
decisions were made when the number of new credits (lending) was on the
rise. The economy, after a long period of free access to sources of
credit, cannot adapt quickly to their almost total curtailment,"
Trofimova said.
"We believe more than 20 percent of loans have signs of problems and that number is still rising," she said.
S&P cut Ukraine`s rating to B from B+ in October because it was concerned about recapitalisation.
At
Jan. 1, 2009, 184 banks were operating in Ukraine with a total
capitalisation of 121.4 billion hryvnias ($16 billion) and assets worth
972 billion hryvnias ($126 billion).
Ukraine`s largest bank is
privately owned Privatbank, followed by Raiffeisen Bank Aval, belonging
to Raiffeisen, UkrSibbank, majority owned by BNP Paribas and
Ukrsotsbank, owned by UniCredit.
The country`s No.5 bank,
Prominvestbank, was bought by Russian state-controlled VEB bank after
spending several months in receivership. Officials said a run on its
deposits in October was unconnected to the financial crisis.
Last week, the country`s No. 15 bank, Ukrprombank, was also placed in receivership.
Reuters
