For the average Ukrainian, the banking system is finally gaining better shape.
As Ukraine’s banking sector went through many shocks during the past three years — the nationalization of its largest bank PrivatBank, currency depreciation, the liquidation of more than 90 banks and the loss of billions of dollars through insider lending — it is finally hinting at signs of recovery.
Vadym Tomashevskyy, marketing director of E-consulting Company, noticed better credit card services from his banks PrivatBank and Bank Vostok.
“You don’t have to borrow the money from friends,” he told the Kyiv Post. “You have everything you need on your card with a credit limit of Hr 27,000 and 55-days grace period.”
In 2017 clients have already deposited Hr 22.4 billion into banks, Igor Levchenko, head of Ukrsibbank BNP Paribas’ personal banking department, said. The loan portfolio of Ukraine’s largest banks also increased by Hr 20 billion for businesses and Hr 7.8 billion for individuals since January.
More positive signs come from the NBU which reported in September that for the first time in three years Ukraine’s banking system brought Hr 3.4 billion in profits. In comparison, last year the figure was at Hr 158 billion in losses.
Low trust
Tomashevskyy’s trust in Ukrainian banks, however, is still the exception rather than the rule, as most Ukrainians still do not fully trust the banks.
A study published by Razumkov’s Center of Social Research, a public policy think tank, on Oct. 23 shows that more than 75 percent of Ukrainians do not trust the National Bank of Ukraine.
This could change however.
Volodymyr Payuk, analytics department director of the Prosto Bank Consulting agency, says that while the population’s trust is low, bankers in Ukraine and abroad actually appreciate the NBU’s stabilization and bank cleaning and believe that it will build stronger trust in the long-run.
“Ukraine’s banking system liquidity, as well as deposits’ flow started to improve again,” he said, admitting that it happened “not as quickly as we all wanted.”
State trust
This is also noticeable in Ukraine’s state-owned banks which are trying to ensure stability and safety of their customers’ deposits.
Yuriy Chepusov, an independent attorney who provides services to banking clients, confirmed that many Ukrainians relocated their assets to state-owned banks which are seen as more trustworthy and backed by the state.
“I also transferred my deposit to state-owned Ukreksimbank as there I have an opportunity to take my money anytime I want,” the former state-owned bank employee said. “And they will warn me in advance if anything happens in Ukraine’s banking system again.”
Since January 2017 Ukraine’s four leading state-owned banks — PrivatBank, Oshchadbank, Ukreksimbank, Ukrgazbank — increased their overall share of bank deposits by 2.7 percent up to 56.4 percent, or Hr 494 billion, according to finbalance.com.ua news website.
Buried in loans
But this slight positive trend is not enough for Ukraine’s banking to gain confidence.
Tomashevskyy is satisfied with the banks he currently uses, but admitted that he had some difficulties in the past. For example, his previous bank OTP Bank, kept on shifting the 30–32 percent floating currency rate on his mortgage loan every year during 2005–2012.
Vadym Tomashevskyy, marketing director of the E-consulting business consulting company. (Courtesy)
“Fortunately, I managed to pay it off and forgot about that bank forever,” Tomashevskyy said.
Because of his negative experience, today Tomashevskyy is willing to take out only short-term loans.
Keeping cash
Instead, many Ukrainians prefer to hold onto their money and switch into savings mode keeping their cash in safety deposit boxes. It is also easier for Ukrainians to access their money.
“Many banks put limits on cash withdrawal. But when you have a deposit box, you have no limits,” Chepusov said.
In practice, however, this is still not the safest option.
“People are worried about using this option considering the recent news about deposit boxes being robbed recently,” Chepusov said.
Ukrainians also prefer to hold onto cash as many of them still have unpaid bank loans.
NBU reported more than 55 percent of loans, or Hr 560 billion, in Ukraine as not being paid back to banks in 2017.
Banks can tackle unpaid loans by bringing the case to court or arresting a deposit account of the debtor.
“People are afraid to show the government that they have money,” Chepusov said. “Especially when they were included in the list of problematic loans payers.”
