Banks with foreign capital, taking market share in almost 50%, up to 2009 suffered a loss of $ 1.3 billion poorer results showed only banks with the interim administration.

In 2009, foreign banking groups have stopped buying up domestic banks and focused on the financial support of existing assets.

Big changes
    

Recall: in 2005-2008. Foreign investors have bought up dozens of Ukrainian banks for quite a fabulous price at a cost target of more than $ 12 billion, however, instead of profit and the seizure of more and more market share last year, banks are “foreigners” and their eminent owners were forced to take care of banal survival. The paradox is that they have become hostages of their own aggressive policies. As you know, the majority of foreign owners, owning a bank in Ukraine, sought to whatever was to drastically increase its market position.

For this Ukrainian “daughters” were supplied with cheap funding environment in the foreign currency they had only to issue loans to end borrowers. As a result, about 80% of the loan portfolio of banks with foreign capital was denominated in foreign currency, whereas in the whole banking sector this figure barely exceeded 50%. It is not surprising that the “foreigners” most affected by arrears due to the steep devaluation of the currency.

Thus, for 11 months in 2009 loss of Raiffeisen Bank Aval was 1.6 billion UAH., UkrSibbank - 1,2 billion UAH. “OTP Bank - 0.9 billion UAH. The greatest loss of financial establishments with foreign participation demonstrated Swedbank. According to the Association of Ukrainian Banks (AUB; Kiev, in 1990, about 130 members), the negative financial result of the bank on December 1, 2009 reached 2.6 billion UAH. This is more of the authorized capital of the financial institution on that date. Thus, the balance capital Swedbank was negative (-37.8 million UAH.).

A similar pattern is observed only in the most desperate banks with the interim administration of NBU. Must be emphasized that the loss of Swedbank has increased dramatically in just two months (October-November 2009). On October 1, this figure was less than 1 billion UAH. It is noteworthy that in October, was attached to Swedbank Swedbank-Invest. At the time of delivery of the material in the print press office Swedbank has not responded to the request.

At the same time high-ranking source in the National Bank assured that Swedbank has sufficient regulatory capital and does not violate the norm of capital adequacy (H2). He said financial institution built up charter fund and raised a subordinated loan. In May 2009 already rumors that Swedbank intends to sell its Ukrainian “daughter” and talks about it with the EBRD. However, later the press office Swedbank denied this information. And in August 2009 has information on the intention of the owners to increase the authorized capital of Swedbank on 5 mlrd grn. If the period of active growth of foreign owners of capital built up to race their creations for the expansion of active operations, they are now forced to offset losses from defaults on loans issued inadvertently.

fairness it should be noted that while the foreign banking groups to provide sufficient support for its Ukrainian unit. This is evidenced by the facts. First, banks with foreign capital experienced the peak of the crisis, almost without having to refinance the NBU. Secondly, while none of the foreign bank is not bankrupt, while more than 20 local players were handed over to the temporary administration of NBU. However, there are cases where because of the crisis, foreigners were forced to turn off the banking business in Ukraine. Thus, the Netherlands ING Bank in early 2009 eliminated the retail division in Ukraine.

Remains sweet
    

In early 2009, representatives of some foreign banks” stated intention to buy fallen in price because of the crisis, domestic financial institution. However, this did not happen. Following in 2009 can be identified only completion of the transaction on purchase Prominvestbanka Russia Vneshekonombank. As a result, Russia”s capital secured a dominant position in the domestic banking sector to foreign financial establishments. Over 25% of foreign investment in the Ukrainian banking system are the origin of Russia.

However, it is worth noting a number of specific transactions. As is known, during the boom of mergers, acquisitions, some Ukrainian owners of the banks did not sell their offspring to foreigners completely, leaving under his control a substantial interest. For example, in 2006, businessmen Ernest Galiev and Alexander Yaroslavsky sold the French BNP Paribas shares only 51% of UkrSibbank.

This ownership structure was maintained for three years. In early 2009 it became necessary to replenish the capital next UkrSibbank. However, Mr. Galiev did not want to make money. In June, he sold his portion of the shares in the amount of 24,5% majority shareholder. The amount of the transaction were not disclosed. Thus, after the capital increase the share of BNP Paribas in UkrSibbank reached 81,4%, the share of Alexander Yaroslavsky - 18,6%. A similar situation in the bank “Forum”, 63% owned by German Commerzbank. The owner 26% of shares of bank “Forum” is Leonid Yurushev.

For almost half a year shareholders can not increase a bank”s charter capital to 1.1 billion UAH. “The next meeting of shareholders scheduled for March. The negotiations between the shareholders are, what they will end - it is a question for shareholders. As long as capital is enough - we have the norm of capital adequacy of H2 is 16% (at the standard rate of 10%. - Auth.)”, - Noted Yaroslav Kolesnik, chairman of the bank “Forum”. According to the Business, Mr. Yurushev and representatives Commerzbanka can not agree on the price of shares.
    

There are also examples where the Ukrainian majority owners are forced to transfer control of the bank to its foreign partners. So, in January 2010, “VAB Bank announced that the Netherlands holding TBIF Financial Services NV intends to concentrate 98% of its shares. According to NBU, even at 1 October 2009 51% of “VAB Bank belonged to the family of businessman Sergei Maximov.

According to a press release from the bank, it is planned that the amount of the transaction to increase the TBIF be around EUR24 million, depending on market conditions at the time of closing. It is expected that the transaction will be completed no earlier than II quarter of 2010 Since the nominal value of 47%-stake in up to EUR15, 5 million, the multiplier of the transaction (the coefficient of price-to-book, the ratio of market price of shares to face value. - Ed .) is only 1,6. During the boom of mergers on average, this indicator was equal to 4-5.

However, in 2009 there have been others, small-scale transactions. In the summer of the EBRD and the German state development bank KfW acquired a total of 30% of Kharkov Megabank. It should be noted also that in 2009 he received a banking license and started to work in our country, “Deutsche Bank Ukraine” - “Daughter” the biggest bank in Germany. Significant that the registration documents the bank filed the Germans back in 2008

Ready

According to NBU, at the end of 2009 in Ukraine there are 50 banks with foreign capital. Analysis of key performance indicators such financial establishments shows a slight worsening of their positions (see “Key figures …” on page 27). So, on December 1, 2009 the share of foreign capital in the domestic banking sector was 43%, whereas the previous year - more than 46%. The decline in the rate of 3 percentage points observed on net assets. Although the crisis reduction of assets - most likely a positive than negative. After all, if the credit portfolio (the main component of assets) is reduced, it usually means that borrowers are correctly implemented interest payments (the practice of writing off bad loans from balance sheets has not yet become widespread).

At the same time it should be noted intensification of foreign capital banks in the deposit market population. Before the crisis, “foreigners” often relied on external funding, discount rates on deposits for individuals and, ultimately, lost in this segment of the financial institution with Ukrainian roots. For example, at the end of 2008 the proportion of “foreigners” in the market of deposits of physical persons amounted to 33,5%. At a time when foreign markets are closed, and the parent structures are not particularly generous, banks with foreign capital is focusing on attracting the savings of private investors. As a consequence, the end of 2009, foreign capital has won nearly 39% market share of private deposits.

Note also that the nationalization of Ukrgasbank, “Rodovid Bank and the Bank” Kyiv “has contributed significantly increase the proportion of state capital in the banking sector. If, before the crisis, the market share of the two state banks (Oshchadbanka and Ukreximbank) did not exceed 10%, now at the expense of the state formed 26,4% of the capital of the banking sector. Tri State Bank belong to the group “Major” on the classification of the NBU. Against this background, greatly reduced the role of private banks, controlled by Ukrainian owners. For example, the 18 largest banks, only five major with Ukrainian capital: Privatbank, Nadra Bank, Bank Finance and Credit “, Brokbusinessbank and Kreditprombank.

Bankers - …

… on shares

Yaroslav Kolesnik, chairman of the bank “Forum”:
  

- The share of foreign capital in the banking sector is bound to grow in the future, although not as rapidly as before. However, increasing the share of state banks is situational. In fact, they will not have a major impact on the development of the banking market, as well as specialize in matters of government. I think the banks with private national capital will also actively develop.

Moreover, subject to availability of sufficient liquidity (funding) they can effectively trigger in the process of ending the crisis. It is no secret that foreign banks are more conservative, they need more time for decision making. While local players better understand the market. In any case, the first banks to resume lending to the economy, which arise from excess liquidity, regardless of the origin of their capital. I think it will happen in the second half of 2010

… Capital

Vladimir Lavrenchuk, chairman of Raiffeisen Bank Aval “:

- the criterion of exit from the crisis is the bank capital adequacy. That”s capital - is the financial “cushion” that promotes prosperous overcome difficulties. The more the owners have invested in the bank during the crisis, the greater the chance that he will thrive. Foreign owners for a period of crisis contributed to the capital of Ukrainian banks about $ 2 billion, how many have domestic owners, I do not know. I want to mention that the quality of loan portfolio in many banks is approximately equal. Yes, the share of foreign currency loans from banks with foreign capital above, and clientele as a whole was better, as foreign banks have applied very conservative risk management approach to the evaluation of borrowers.

… about the prospects

Nikolay Lagun, Chairman of the Supervisory Board of Delta Bank “:

- I think that with the least losses from the crisis will come banks with foreign capital, which have a strong capital support of parent structures. At the same time I do not rule out that the current crisis would substantially improve the market prospects of a number of financial establishments with private capital of Ukrainian descent. Everything will depend on the motivation of owners. If the bank is not a core business of any PPG, the probability of its financial support in the shortfall is very low.

However, I doubt that foreign owners can refuse to support their Ukrainian units. Already too great a price was paid for access to the market to now leave it. Although if the world economic situation will worsen and governments of other countries impose restrictions on investing in emerging markets, the situation could change dramatically.