In Focus (#03 March 2011)

Litmus Test Paper

Despite capital injections and strong government support, commercial banks in Ukraine have no doubt felt the negative consequences of the economic downturn. The crisis became a litmus test paper to reveal existing pitfalls across the regulatory frame, operational and sectoral risks, management failures, etc. Booming consumer lending without proper assessment of borrowers led to a drastic increase in bad loans. Another trap for both creditors and borrowers was the issue of credits in foreign currency. Business prospects for many borrowers turned quite quickly from growth into decline.

The estimates of experts assume that their share is about 30-40%. No wonder, the ongoing period for debt restructuring and gradual recovery of credibility is helping to identify existing gaps.

Activities by the Government to resolve these issues are laudable. Meanwhile, it is likely that there is a strong need to assess the comprehensive impact of any given novelty.

The UJBL attempted to sum up notable developments and navigate you on the recent changes in the banking sector.

Happy reading,
Olga Usenko

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