The shakeout in Ukrainian's banking industry -- which dropped the weakest third out of the market already -- is likely to accelerate.
Down from 180 to 120 banks in the last two years, the National Bank of Ukraine on Feb. 4 issued more stringent capital requirements that could send another third of Ukraine’s out of business by January — down to 80 banks.
The minimal capital needs to increase to Hr 300 million by January, increasing to Hr 500 million (now $18.4 million) by July 2024.
Currently, 70 Ukrainian banks do not have this amount and 56 of them do not have any resources, according to the NBU. Their share of the market is under 2 percent.
Acting Deputy NBU Head Katerina Rozhkova said the stricter requirements take into account the deterioration of the economic situation.
Some won’t make it.
“It is not realistic that all 100 percent will fulfill capital requirements on time,” Vadim Berezovyk, CEO of Cominbank, told the Kyiv Post.
If they don’t find additional investment, they will likely be candidates for merger or acquisition.
“It is needed to improve the legislative base, simplify this procedure, shorten its terms, so banks have an opportunity to fulfil the requirements within this time frame,” Berezovyk said.
Some believe the wave of consolidation will kill competition among lenders.
Serhiy Rybalka, the head of finance and monetary policy parliament committee, said banks will have a hard time making “their business plans if the NBU is changing rules of the game,” he said.
The NBU dedicated two years to cleaning the sector from insolvent banks and shell institutions involved in illegal transactions.
Kyiv Post staff writer Olena Savchuk can be reached at [email protected]
