International banks are injecting $2bn of new capital into their
subsidiaries in crisis-hit Ukraine, in a rare flash of good news for
the troubled economies of central and eastern Europe.
Seventeen
banks signed an agreement last month pledging to raise the capital in
the wake of the International Monetary Fund's $16.4bn (?13bn, £11.7bn)
package to support Kiev as it struggles with recession and difficulties
with external financing.
Ten foreign-owned banks promised to
stump up $2bn, and seven Ukrainian-controlled banks pledged a further
$1bn, including capital contributions made since the country plunged
into economic crisis last autumn.
But with central and east
European markets in turmoil, political disputes in Kiev and debates
raging in western Europe on supporting the eastern states, Ukrainian
officials could not be sure banks would deliver on their pledges.
Erik Berglof, chief economist at the European Bank for
Reconstruction and Development, the multilateral lender that is
providing ?500m to support Ukrainian banks, welcomed the foreign
institutions' moves. "It shows the problems in the region are
manageable but they do have to be actively managed," he said.
The remainder of Ukraine's 170 banks will also be asked to increase capital, as required.
The Financial Times
