Valeriya Gontareva, who on June 19 became the first woman to head the nation’s central bank, will face a challenging task of meeting the overoptimistic expectations that the banking and investment community have of her.
“The market’s
reaction on the appointment of Gontareva is definitely positive,” Vladyslav Rashkovan,
head of the National Bank of Ukraine’s banking system strategy and reform department,
told the Kyiv Post.
In her
first speech to NBU board members, the 49-year-old former investment banker
voiced her readiness to continue carrying out a strategy for reforming the
banking sector through 2020 – one of the key initiatives that her predecessor,
Stepan Kubiv, had launched over three months ago. Sustaining cooperation with
the International Monetary Fund was another message she delivered that day.
Christine
Lagarde, IMF’s managing director, was pleased with Gontareva’s appointment, being
among the first to greet the newly appointed central banker via phone.
“We look forward to working with the new governor, Valeriya Gontareva,”
said IMF spokesperson Gerry Rice during his June 19 press briefing. However,
journalists started questioning Gontareva’s ties to President Petro Poroshenko
– as an investment banker with Investment Capital Ukraine she consulted him on
developing a Russian branch of his confectionery business. This poses a
potential risk for the central bank’s independence, a general issue that Rice has
raised in the past as being a crucial factor, especially in Ukraine’s case.
“Independence is a key requirement for the central bank’s agenda,” is
how Poroshenko addressed the IMF’s concerns while presenting Gontareva to the
NBU staff on the day of her appointment. The immediate response to the lender’s
critical signal came as no surprise given the $17 billion bailout package that the IMF is providing.
Andriy Onistrat,
board chairman of National Credit bank, says that Gontareva’s experience with
international finance institutions is a key advantage. “A professional with
experience in investment banking, who knows the market well and the ‘movers and
shakers’ there,” he told Delo business news website.
After her
appointment, Gontareva immediately vacated the board director position at ICU,
and sold all her shares in the company. Before this, she also had left the
board of Avangard, a commercial bank owned by ICU.
Her seven
years with ICU is what made Gontareva a good candidate for managing the central
bank. After launching the asset management company in 2007, she turned it into a leader
on the debt securities market in terms of a number of deals. The investment
community, likewise, expects the NBU heavily promote the homegrown securities
market as well.
Making
money on Ukraine’s illiquid bond market takes good financial smarts and
macroeconomic expertise. Meanwhile, Kubiv before her was much criticized for not
grasping macroeconomic issues.
However, since
the NBU plans to introduce inflation targeting – a policy implemented by the
world’s leading central banks such as the U.S. Federal Reserve and recommended
by the IMF – it needs to be headed by somebody with a profound knowledge of
macroeconomics.
Up until
now, local central bankers focused on keeping the hryvnia stable, whereas inflation
targeting is a monetary approach that requires a wider focus on economic
development and price stability. To do this effective instruments are needed. When
the Kyiv Post asked Kubiv about the instruments that the NBU is going to use to
target inflation, he did not list them and explained that more time is required
to research this.
Some
experts acknowledge Gontareva’s commercial banking experience – she held senior
positions at the local units of French Societe General Bank in 1996-2001 and
Dutch ING Bank in 2001-2007. However, there were other candidates with
substantial experience in commercial banking – like Volodymyr Lavrenchuk, head
of Raiffeisen Bank Aval, the Ukrainian unit of the Austrian banking giant, who
was also listed as one of the candidates by analysts with whom the Kyiv Post
spoke. But Poroshenko chose Gontareva and parliament approved the decision.
In her
income declaration, Gontareva said she owns a luxurious Porsche Panamera and
Porsche Cayenne sports utility vehicle. She also reported $470,000 of personal
income last year. Her spoken Ukrainian is weaker than her Russian, while her
shaking voice during the speeches that she gave following her appointment
surprised the audience as they expected one of the country’s leading investment
bankers and first female central banker to be less emotional.
Kyiv Post associate business editor Ivan
Verstyuk can be reached at [email protected].
