Interview of Taras Kyrychenko, Chairman of the Board of PRAVEX-BANK, on how to resume borrowing in Ukraine.
«Fatigue is not a measure of work,» the chairman of the Board of PJSC CB PRAVEX BANK, Taras Kyrychenko shared with LDaily.
He is not in lacking sense of humor despite serious work. He wants to be open with his colleagues, showing
that they have no reason to fear their leader. Taras is an absolute patriot. He loves his country as it is – with disadvantages, minuses and all imperfections. This is his country.
In a conversation with LDaily, he told about the confidence of banks and borrowers and about the strategy of Ukrainian banking sphere.
LDaily: Taras, according to your estimation, what is now happening with the Ukrainian banking sector?
Т. Kyrychenko: To put it briefly, Ukraine is going through the final stage of cleaning up the banking sector. Many financial institutions left the market. A wealthy banking market was transformed into four groups:
• state banks that occupy more than 50% of the
• international, mainly European representatives,
• banks with Ukrainian capital,
• banks with strategic capital.
Currently, the most urgent is the issue of clearing the banking system of the country from problem loans and restoration of borrowing: the bankers have enough money, but they are very afraid to give loans. Therefore, the state’s task is to provide enough comfort for the money to go into the economy.
LDaily: As a banker, what do you think about the sweeping of the banking sector?
Т. Kyrychenko: I would have avoided this word, because «sweep» is more associated with a military operation. But to a large extent, the market was cleared of those banks that were less stable, less reliable, and engaged in dubious business. I can not say that there are only reliable ones, because everyone has their own situation. Therefore, of course, any legal entity and individual must assess their risks in interaction with one or another bank. I can say that most of the international banks in Ukraine are reliable, they are capitalized and have reliable banking groups that do not leave them in danger.
LDaily: You mentioned that for the banking system of the country, the most important step is the recovery of borrowing market. What actions should be taken in this direction first of all?
Т. Kyrychenko: You need to understand what to do to past the point. That means, to start borrowing from
scratch under the new rules.
We, banks, must know that a loan is repayable. If the loan is not repayable, it makes no sense to issue it.
And in order to make loans repayable, we must understand that at any stage we have enough information. It means that before the issue, we can find information about the borrower, his situation with other banks.
We have the opportunity to monitor this loan during usage. We must understand: if something goes wrong, the borrower has enough incentives to restructure. And Without these items there will be no borrowing. And it is very important for enterprises and for the economy of Ukraine. Therefore, I repeat, it is very important to ensure the protection of the rights of creditors and the search for a profitable business model. Our task is also to accelerate economic growth.
LDaily: Does business model, you mentioned, exist now?
Т. Kyrychenko: No, it does not exist. It is unclear now, which sectors of the economy are more profitable, and in which there are more risks. Each bank is trying to find a formula for success. Currently, our bank is dominated by the corporate sector, and from the new year retail will be here as well.
LDaily: Could you please characterize today`s strategy of the Ukrainian banks.
Т. Kyrychenko: It is completely absent, or it is fundamentally wrong. Banks are trying to find a successful business model in today’s Ukrainian market. This success is a balance or sum of many vectors: the regulatory vector of Europe and Ukraine; the fight against money laundering; return on investment; credit and market risks. I would say that most banks have their own hypotheses on which business model can be successful. But whether it will be or not, it should be checked.
LDaily: Can we already talk about restoring confidence among Ukrainian banks?
Т. Kyrychenko: Now our bank is lending to legal entities. But the queue of transparent and reliable borrowers is not worth it. Probably because they are not so profitable. Our task is to organize the transfer of funds from those who have their surplus to those who need them.
Today the huge sums of money are focused and placed in deposit certificates of the National Bank of Ukraine. I would like it to become a real sector. It will create jobs, business and qualitative business environment in the country and improve GDP.
I would like to give more statistic data. In the banking system for 6 months the share of deposits in the financial sector was 22 billion UAH., The loan portfolio amounted to 6 billion UAH., The share of deposits in legal branches is 9 billion, the loan of legal loans is 2.5 billion. In other words, the banking sector turned to deposit, but loans amount does not grow. But we should remember that not only a borrower should trust the bank, but the bank should trust the borrower too.
LDaily: State and banking sector. How do you see the development of their relations?
Т. Kyrychenko: The state has its own vision in the direction of banks, its corporate governance. Probably we would like to improve it. I believe that the share of state capital banks can and must be smaller. Private structures are capable of coping with it quite effectively. And this is a matter of time. Corporate governance must be significant both in private and public sectors. And this is the issue of regulation that the National Bank is engaged in.
LDaily: Do you agree with the idea that bank capital flows out of the country?
Т. Kyrychenko: Vice versa, it enters the country. If we analyze the changes in banks’ capital over the last years, from 2014 to 2017, we will see billions of investments in bank capital. But not all investments are desirable. Is this investment desirable? Of course, not, it’s better to spend this money on the necessary things. In a like manner investment in capital is not always desirable for future and for business development. Some banks are forced to maintain capital adequacy.
LDaily: What foreign investors Ukraine lacks?
Т. Kyrychenko: If we talk about investments to the country, it will be good if the country meets investors’ desire for profitability, taking into account the level of expected risk.