Post on 17-Jul-2015
Ukraine Update: April 2015Challenges faced, progress made and what must come next
C.I.S. Bankers T10 Forum April 24, 2015
Ukraine Macroeconomic events timeline
● March 2015: IMF approved new EFF program of $17.5bn on March 11th. First disbursement of $5bn was received March 13th. Sovereign FCY debt restructuring exercise commenced on March 16th. Hryvnia currently at 23.3-23.5 per dollar.
● March 2-3, 2015: Ukraine’s parliament approves an austerity package needed to qualify for the IMF loan. Ukraine’s central bank raises its benchmark interest rate to 30 percent, the highest since 2000. Hryvnia strengthens to 24.25 per dollar, a three-week high; 2017 bonds gain to 44.1 cents on the dollar.
● Feb. 25-6, 2015: National Bank of Ukraine implements additional foreign-currency market restrictions but then modifies them the next day. UAH weakens to record 33.75/$ on Feb. 27; bonds drop to all-time low of 41.35 cents on the dollar on Feb. 23
● Feb. 12, 2015: Ukraine reaches staff-level agreement with IMF on bailout package totaling $40 billion after allowing the hryvnia to weaken 31% on Feb. 5. Russian President Vladimir Putin and Ukraine’s Petro Poroshenko broker cease-fire agreement in Minsk, Belarus. UAH at 26.7/$; bonds at 56.65 cents; country’s currency reserves drop to record $6.4 billion in January, while the country faces $5.4 billion in foreign debt payments in 2015, according to Finance Ministry data.
● Dec. 11, 2014: Prime Minster Arseniy Yatsenyuk calls for international donor conference to avoid possible default, which hasn’t been held to date. He also requests talks on expansion of IMF loan agreed last March. FX reserves drop to $7.53 billion in Dec.; UAH ends year at 15.82/$, weakening 48% from 2013; bonds finish at 60 cents, giving a yield of 33.85%.
● Nov. 27, 2014: Ukraine’s parliament confirms new government, led by Yatsenyuk, after pro-EU parties dominate Oct. elections. FX reserves drop to $9.97 billion in Nov.; UAH at 15.02/$; bonds at 78.53 cents.
● Sept. 5, 2014: Ukraine and the separatists agree on a cease-fire in Minsk, Belarus. The truce is repeatedly broken in the months to come. FX reserves rise to $16.4 billion in Sept. after $1.38 billion disbursement from IMF, the last to date; UAH at 12.95/$; bonds at 87.64 cents.
● July 17, 2014: Malaysia Air flight MH17 is shot down in the Donetsk region, prompting international outcry. FX reserves drop to $16.1 billion in July; UAH at 12.28/$; bonds peak at 103.25 cents on July 11.
● May 25, 2014: Billionaire businessman Petro Poroshenko wins Ukrainian presidency. FX reserves rise to $17.9 billion in May after receiving $3.2 billion from IMF; UAH at 11.80/$; bonds at 98.59 cents.
● March 27, 2014: Ukraine agrees on $17 billion loan from IMF, part of a $27 billion bailout. Six days earlier Russia annexed Ukraine’s Crimean peninsula, sparking U.S. and EU sanctions. FX reserves drop to $15.1 billion in March; UAH at 11.12/$; bonds at 97.81 cents.
● Feb. 22, 2014: After mass-protests in central Kiev turn deadly, President Viktor Yanukovych flees Kiev, eventually arriving in Russia, and law makers in Kiev decide to hold a presidential election in May. FX reserves at $15.5 billion in Feb.; UAH at 9.95/$, bonds at 93.19 cents.
● Dec. 17, 2013: Ukraine receives $3 billion bailout bond from Russia, the first in what Russia said would be a $15 billion package. FX reserves rise to $20.4 billion on Dec. 31, to date the highest level since Maidan protests began; UAH at 8.24/$; bonds at 98.94 cents.
● Nov. 21, 2013: Former President Yanukovych backs out of a trade accord with the EU in favor of stronger ties with Russia, triggering protests in Kiev and across Ukraine. FX reserves stood at $18.8 billion at end-November; UAH at 8.23/$; bonds at 92.69 cents.
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Ukraine crisis overview*
*This slide and its figures and data is from the Ukraine Ministry of Finance Investor presentation dated March 13, 2015
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Ukraine: 2014 start of reforms implementation*
*This slide and its figures and data is from the Ukraine Ministry of Finance Investor presentation dated March 13, 2015
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Ukraine revised reform program: IMF $17.5 EFFOn 11 March 2015, the IMF approved a US$17.5 billion Extended Fund Facility Program to address Ukraine’s more protracted BOP needs and deeper structural problems. The first disbursement of $5bn was effected on March 13th.
Key Reform Components:Monetary/ NBU Reform • Flexible Exchange Rate • Restructure of National
Bank of Ukraine • Future adoption of Inflation
targeting • Rebuild of FX reserves
Fiscal Reform • Reduction of subsidies
to SOEs, including zero Naftogaz deficit by 2017
• Healthcare reform (open for private sector financing), pension and education reforms
• Reduction of civil service workforce
• Improve Revenue administration and public finance
Energy Sector and Naftogaz • Increase of tariffs (gas for
population by 240%, heating prices by 80% in 2015, further hikes in 2016 and 2017)
• Increase Naftogaz efficiency and governance
• Energy subsidies to be substituted by compensation schemes
• Improve collection rates
Governance / Transparency • Anti-corruption and
transparency of Government operations
• Enhancement of anti-money laundering
• Streamline of regulatory framework
Reviews • June 15, 2015 • September 15, 2015 • December 15, 2015 • Quarterly thereafter with
scheduled on December 15, 2018.
15 March 2017
15 March 2016
Source: IMF Report, public information.
IMF Review and Disbursement Schedule
Amount of Purchase, Million US$
5,000
15 December 2015
15 September 2015
15 June 2015
15 June 2016
15 December 2016
15 September 2016
1,666.7 1,666.7 1,666.7 621.9 621.9 621.9 621.9 626.3
1 2 3 1 2
March 11-13 2015
Banking Sector • Unwinding of related party
lending • Resolution of banks failing
to comply with recap plans • Strengthening capacity of
banks to resolve bad loans • Supervision upgrade
Disbursements starting March 2016 are quarterly and amount to $620-630 Million
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Ukraine: IMF base case projections2013 2014 2015 2016 2017 2018 2019 2020
(percent change, unless otherwise indicated)* Est. Prog. Prog. Prog. Prog. Proj. Proj.Nominal GDP (billions of Ukrainian hryvnias) 1.466 1.535 1.85 2.087 2.356 2.626 2.896 3.194Real GDP 0.2 -6.9 -5.5 2 3.5 4 4 4Nominal GDP (billions of USD ) 178.78 127.92 85.25 92.76 101.99 111.74 122.71 134.77Contributions:
Domestic demand 1.1 -12.4 -7.7 2.6 4.1 4.5 4.8 5.2Private consumption 5.3 -5.8 -5.2 2 2.8 3 3.2 3.2Public consumption -0.5 -0.5 -0.2 -0.9 0.5 0.5 0.3 0.3
Investment -3.7 -6.1 -2.3 1.4 0.8 1 1.3 1.8Net exports -0.8 5.5 2.2 -0.6 -0.6 -0.5 -0.8 -1.2
GDP deflator 4.1 12.5 27.6 10.6 9 7.2 6 6Unemployment rate (ILO definition; percent) 7.3 10.5 11.5 11 9.6 8.6 8.1 8Consumer prices (period average) -0.3 12.1 33.5 10.6 8 6.2 5 5Consumer prices (end of period) 0.5 24.9 26.7 8.7 7.2 5 5 5Nominal monthly w ages (average) 8.2 5.9 14.5 10.6 11.8 10.2 9.2 9.3Real monthly w ages (average) 8.5 -5.5 -14.2 0 3.5 3.8 4 4Savings (percent of GDP) 9.6 8.8 10 11.8 12.5 13.2 13.9 14.7Investment (percent of GDP) 18.8 13.6 11.4 13.1 13.6 14.4 15.5 17Public finance (percent of GDP)Overall balance (including Naftogaz operational deficit) -6.7 -10.3 -7.4 -3.9 -3.1 -2.6 -2.4 -2.2
Public and Publicly Guaranteed Debt 40.6 72.7 94.1 92.6 88.9 83.3 77.3 71Money (end of period, percent change)
Base money 20.3 8.5 27.3 11.3 11 9.7 9.1 8.5Broad money 17.6 5.3 19.1 15.4 15.4 14.4 12.5 12
Balance of payments (percent of GDP)Current account balance -9.2 -4.8 -1.4 -1.3 -1.1 -1.2 -1.6 -2.3Foreign direct investment 1.8 0.3 1.4 1.9 2.1 2.1 2.1 2.1
Gross reserves (e-o-p, billions of U.S. dollars) 20.4 7.5 18.3 22.3 28.5 35.2 38.4 38.7Months of next year's imports of goods and services 3.3 1.5 3.3 3.7 4.5 5.2 5.2 4.9
Percent of short-term debt (remaining maturity) 33.2 17.4 43.7 57.4 69 82.9 84.1 78.4Goods exports (annual volume change in percent) -6.4 -11.1 -4.2 5.1 5.8 6.1 6.5 6.5Goods imports (annual volume change in percent) -5.3 -26.9 -11.9 5.7 6 6.2 7.3 7.9Goods terms of trade (percent change) -1.1 -2.8 0.4 -0.7 0 -0.1 0.1 0.3Hryvnia per U.S. dollar (end of period) 8.3 15.8 22 22.7 23.4 23.5 23.6 23.8Hryvnia per U.S. dollar (period average) 8.2 12 21.7 22.5 23.1 23.5 23.6 23.7Real effective rate (CPI-based, 2010=100) 106.8 82.5 68.6 70.5 71.7 72.2 72.9 73.3* Source IMF Country report March 20156
2015 IMF program: Prior actions and benchmarks
Source: IMF Report, public information.
Prior actions Status Completion date
Parliament will approve legislation that introduces unlimited liability of bank owners on losses arising from loans granted directly or indirectly to the benefit of bank shareholders holding 10 percent or more of total voting shares as of end-2014 ( Completed March 2015
The energy regulator will adopt and officially publish a decision to raise household gas prices to UAH 3600/tcm for consumption in Tier 1 and UAH 7187/tcm for consumption in Tier 2, effective April 1, 2015 Completed February 2015The energy regulator will adopt and officially publish a decision to raise household heating prices to UAH 625/gcal on average, effective April 1, 2015 Completed February 2016
The Cabinet will submit to Parliament legislative amendments to improve Naftogaz collections. These amendments should include (i) lifting two longlasting moratoria (Law 2711-IV/2005 and Law 2864-III/2001) that protect energy and other companies from enforcement proceedings; and (ii) disconnecting noncompliant customers from the gas supply grid Completed March 2015
Parliament will approve a 2015 supplementary state budget law and a package of tax and expenditure legislation consistent with the program deficit ceiling of UAH 78 billion for the general government Completed March 2015Government will hire financial and legal advisors to facilitate consultations with holders of public sector debt with a view to improving medium-term debt sustainability Completed February 2015
Parliament will approve legal amendments to ensure that the NAB (National Anti-ciorruption Bureau) is subject to a robust external oversight process, can investigate former Presidents, can access all relevant information for its investigations, and that appropriate mechanisms are in place to ensure hiring of staff with high integrity Completed February 2015
Financial Sector
Energy Sector
Fiscal Policy
Governance
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2015 IMF program: Prior actions and benchmarks
Source: IMF Report, public information.
Structural benchmarks Status Target date
Parliament will approve amendments to the NBU Law to strengthen the governance and autonomy framework of the NBU Not completed End-April 2015
NBU will notify banks of any identified discrepancies in the related party exposure reports Not completed End-July 2015
Parliament will approve a law on a selective increase of court fees, aiming to double court fee revenue in real terms within 12 months Not completed End-May 2015Parliament will approve a law which strengthens the provisions in the Code of Civil Procedure on Order for Payment for domestic transactions and on garnishment of bank accounts Not completed End-August 2015
Government will prepare a revenue administration reform plan in order to overhaul the state fiscal service: measures to implement governance and institutional reforms that clarify the tax agency’s reporting to the Minister of Finance; removal of large numbers of underperforming officials Not completed End-April 2015The State Fiscal Service will transfer all taxpayers meeting large taxpayer criteria to the LTO Not completed End-December 2015The State Fiscal Service will implement its new arrangements as specifiedunder the revenue administration reform plan Not completed End-December 2015
The Ministry of Economy in cooperation with the Ministry of Finance willprepare a statement of fiscal risks emanating from SOEs Not completed End-April 2015The government will adopt a broad-based strategy to reform the SOE sector, including measures needed to improve budgetary oversight, develop a comprehensive ownership policy, strengthen corporate governance, prioritize which enterprises should be made subject to restructuring, and examine options for improving management of other state assets. Not completed End-May 2015
Take necessary measures to establish the National Anti-corruption Bureau Not completed End-April 2015Strengthen the implementation of the AML framework: (i) proper implementation of the legal requirements related to domestic politically exposed persons (PEPs); (ii) the Financial Intelligence Unit (FIU) will develop a system to assist financial institutions in identifying domestic PEPs; and (iii) proper arrangements will be put in place to facilitate cooperation between the NBU, FIU and NAB Not completed End-June 2015
Parliament will approve legislative amendments to improve Naftogaz collections. These amendments should include (i) lifting two long-lasting moratoria that protect energy and other companies from enforcement proceedings; and (ii) disconnecting noncompliant customers from the gas supply grid Not completed End-March 2015Parliament will approve a new gas market law Not completed End-April 2015Undertake an independent audit of all Naftogaz receivables Not completed End-June 2015
Judiciary/Enforcement
Fiscal Policy
State-Owned Enterprises
Governance
Energy Sector
NBU and Financial Sector
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Return of FDI: Issues to resolve
De-escalation and resolution of the military conflict and political situation with Russia✓
Significant and fast implementation of reforms (anti-corruption, bureaucracy reduction, reform of legal system, etc.) ✓
Boost of market confidence [emergency funding from international community of $10-15bn on top of existing support]✓
Progressive implementation of IMF benchmarks including negotiate of a future gas deal with Russia and reform of state owned Naftogas✓
Successful and timely process of “Restructuring” of the Sovereign FCY Debt Obligations is now underway✓
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# Concerns
1 Current restrictive administrative measures restricting the FX market and adversely impacting int’l trade activity.
2 Current capital controls and visibility of timeline when they may be cancelled
3 FX rate devaluation pressure and effect on banking system balance sheets
4 Significant GDP drops in 2014 and 2015, Donbas assets destruction, and adverse trade actions from Russia increase banks’ NPL levels significantly.
5 Pace and scope of economic stabilization measures
6 Pace and scope of reform measures.
7 IMF $17.5B EFF program’s next disbursements and implementation of IMF structural benchmarks
8 Creditor test cases of concern to the sector (e.g. Mriya , VAB Bank, others)
9 NBU support of banking system needs (e.g. regulatory ratio modifications)
10 Banking sector clean up and post-stress test bank recapitalizations.
11 Overall investor confidence and effects on financing activities and FDI
12 The conclusion and ultimate form of the sovereign FCY debt restructuring
The Return of Lending: Ukraine Financial Sector Concerns
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CB FX reserves
0.00
10,000.00
20,000.00
30,000.00
40,000.00
1/1/113/1/115/1/117/1/119/1/1111/1/111/1/123/1/125/1/127/1/129/1/1211/1/121/1/133/1/135/1/137/1/139/1/1311/1/131/1/143/1/145/1/147/1/149/1/1411/1/141/1/153/1/15
FX reserves, $bn
Central Bank FX reserves, US$ bn
February 2015, CB reserves cover only 6
weeks of import
March 16, 2015, US$2.5 bn from IMF tranche sent to replenish CB FX reserves
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FX reserves vs. rate
(US$bn)
Trading volume: last 12-month and 5-year periods (left and right respectively)
Spot market rates USD/UAH: last 12-month and 5-year periods (UAH per USD, left and right respectively)
Capital flight
Dividends payments
Regulatory restrictions
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UA EurobondsUkraine 2017 Eurobond price
Ukraine 2023 Eurobond price
KievPrime Dynamics
Source: Bloomberg
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Banks Nostro accounts
Source: NBU
Ukrainian banking liquidity
0
12500
25000
37500
50000
1/3/12 3/2/12 5/7/12 7/9/12 9/6/12 11/5/12 1/3/13 3/5/13 5/13/13 7/10/13 9/9/13 11/6/13 1/3/14 3/6/14 5/12/14 7/11/14 9/10/14 11/7/14 1/9/15 3/10/15
UAH, MM
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2014-2015 Ukrainian Banking System Diagnostics & Capital plans
NBU has committed, under the IMF program, to strengthen stability of the banking sector, to work on improvement of regulation, clean the system through stress-tests and provide ongoing liquidity support and assurance that the banks are well capitalized.
February 2015
Diagnostic studies
Completed diagnostic
studies for Top-15
Fully completed diagnostic studies; Submitted plans by
Top-15
Submitted plans by Top-35 banks
Capital targets compliance for
Top-15
Deadlines for recapitalization
targets for 2nd group of 20 banks
Stress-tests timeline
Banking Sector Stress-Tests were Conducted as Part of NBU Commitments Under IMF Program
NBU Instructed the largest 35 banks to launch diagnostic studies • The studies assessed capital adequacy to
meet Tier 1 capital target under different IMF proposed scenarios
• Banks were required to submit business plans to NBU with the view on maintaining capital requirements
Diagnostic studies completed by end-July for Group I banks • Diagnostic studies were fully completed
by end-September
• Banks with problems were required to submit recapitalization and restructuring plans by end-September for Group I banks and by end-November for Group II banks
Banks must be compliant with the T1 capital targets of 7% under the baseline scenario and 4.5% under the adverse scenario through 2016 • Deadlines for compliance are end-
December for Group I banks and end-February 2015 for Group II banks
• Any shortfall should be covered by owners’ cash
• Criteria have been softened further negative UAH devaluation dynamics in February 2015
December 2014
November 2014September 2014July 2014April 2014
Official Diagnostics results are not disclosed to-dateSource: IMF report
Deadlines for recapitalization
targets compliance for 9 largest banks
June 2015
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Banking system reform: unwinding related party Lending
Source: IMF report
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2014 Ukrainian Banking System Diagnostics
Diagnostics of 35 largest Ukrainian banks in 2014PrivatBank Savings Bank of Ukraine Ukreximbank Delta Bank Raiffeisen Bank Aval Ukrsotsbank (UniCredit) Prominvestbank (VEB) Sberbank of Russia FUIB Nadra Bank Alfa-Bank Finance and Credit Bank VTB Bank UkrSibbank (BNP Paribas) Ukrgasbank
Citibank VAB OTP Bank Credit Agricole Financial Initiative Bank Fidobank Pivdenniy Bank Imexbank Platinum Bank ING Bank Ukraine Rodovid Bank Khreschatyk Bank Kyivska Rus” Bank Zlatobank Pivdenkombank Universal Bank Ukrainian Bank of Development BTA Bank Ukrinbank Credit Dnepr Bank
Group II (20)
Strengthening banking system
Capital adequacy and required recapitalization
Assets quality assessment
Protection of creditors’ and depositors’ rights
Purpose of banking system diagnostics as declared by National Bank of Ukraine
Group I (15)
Source: National Bank of Ukraine official website www.bank.gov.ua, Public internet sites
Total cost of banks restructuring are estimated at 9.5% GDP over 2014-2015*
*IMF estimate
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Ukrainian Banking System SnapshotNumber of banks
Number of banks in dynamics
Liquidated banks
1. AKB-Kyiv bank 2. Standard bank 3. Zlatobank 4. Energobank 5. Nadra bank 6. Imexbank 7. Ukoopspilka 8. Profinbank 9. Ukrbusiness bank 10. Cambio bank 11. VBR bank 12. BG bank 13. Legbank 14. VAB bank 15. CityCommerce bank 16. Melior bank 17. Intercreditbank 18. Aksioma bank 19. Prime bank 20. Porto-Franko 21. Demark bank 22. Expobank 23. Green bank 24. Akrabank 25. Actyv bank 26. Terra bank 27. UFS bank 28. Zoloty Vorota 29. Eurogazbank 30. Finrostbank 31. Starokyivskiy 32. AKB bank 33. Zahidinkombank 34. Pivdenkombank 35. Promekonombank 36. Interbank 37. Forum 38. Merkury 39. Brokbusiness bank 40. Real bank 41. Daniel 42. Tavrika 43. Erde bank 44. Basis 45. Innovatsiyno-Promysolviy 46. Stolytsya 47. Deltabank 48. Kreditprombank 49. Omegabank
Banks with temporary administration and in liquidation 2015YTD
2012 (4)
• National standard bank • European Bank • European Bank for Development and Savings • Slavic Bank
2013 (3)
• Ipobank • Odessa Bank • ARMA Bank
2014 (10)
• East European Bank • Ukrainian Financial Group Bank • Transbank • Regional Development Bank • Zamal’nyi Bank • Ukrainian Industrial Bank • BIG Energy Bank • Dnister Bank • Dialogue Bank • Synther Bank
Source: NBU; Deposit Guarantee Fund official website19
Date 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 01.12.14 01.01.15 01.04.2015
Number of banks 76 133 211 228 230 229 227 214 203 195 189 182 179 181 186 193 196 198 197 194 198 180 165 158 151
Systemically Important Banks by NBU (as of 01.12.2014)
Source: National Bank of Ukraine official website www.bank.gov.ua
• Privatbank
• Oschadbank
• Ukreximbank
• Delta Bank*
• Raiffeisen Bank Aval
• Ukrsotsbank (UniCredit)
• Prominvestbank
• Sberbank of Russia
On December 25, 2014, the National Bank of Ukraine has issued NBU Board Resolution No 863 “On Approval of the Procedure for determination of systemically important banks” adopting the methodology for determining systemically important banks.
Systemically important banks will be designated annually using multivariable mathematical model based on the systemic importance criteria. The main systemic importance criteria are total volume of assets, liabilities of legal entities and individuals, interconnectedness (volume of interbank lending) and the volume of lending to key sectors of the economy.
The Resolution is aimed to set the methodology for determination of systemically important banks that affect the banking system stability.
In the near future the National Bank of Ukraine will develop the regulations on supervision of systemically important banks setting, among others, additional capital requirements for them. The National Bank of Ukraine plans to gradually introduce new regulatory requirements for systemically important banks to allow their shareholders to take necessary measures. This will contribute to the soundness of those banks and banking system in general.
* - under temporary administration since 03,03.2015
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Banks’ Capital
Source: NBU
Profit/Loss
No Bank 01.01.2015 01.01.2014 01.01.2015 01.01.2014 01.01.2015
1 Oshchadbank 22 749 157 20 455 511 128 103 752 103 568 090 -8 564 446 2 Privatbank 22 696 359 20 311 621 204 585 003 214 490 857 749 0363 Ukreximbank 13 536 221 18 083 276 125 999 827 94 349 057 -9 805 548 4 Ukrsotsbank (UniCredit) 6 238 628 8 667 738 48 258 327 43 056 668 -2 662 247 5 Raiffeisen Bank Aval 6 148 300 7 236 738 46 859 432 43 460 101 -1 367 334 6 Prominvestbank 6 075 543 5 384 190 52 656 224 39 737 492 -3 453 846 7 VTB bank 5 087 654 3 206 944 36 502 261 25 285 690 642 7958 Delta bank 4 749 714 3 325 344 60 303 279 55 298 418 46 2789 Sberbank of Russia 3 904 103 3 666 785 46 740 331 35 094 686 108 04910 Alfa bank 3 509 689 4 198 756 36 693 914 29 293 387 -744 050 11 Finance & Credit 2 649 050 2 108 622 34 202 971 25 722 051 -215 674 12 ING bank* 1 873 465 1 644 585 12 097 591 9 665 451 228 88013 Citibank* 1 800 058 936 727 10 545 173 6 012 520 1 379 83114 Ukrsibbank (BNP Paribas) 1 780 587 2 650 275 26 336 775 24 111 742 -870 138 15 Ukrgazbank 1 570 507 4 522 482 21 027 912 23 793 944 -2 801 124 16 Credit Agricole 1 413 659 1 665 664 21 079 321 14 142 893 90 41617 OTP bank 1 374 817 3 359 401 21 505 504 18 722 348 -1 999 097 18 Piraeus bank 528 073 410 403 3 228 079 2 517 559 -323 827 19 SEB Corporate bank* 306 806 276 036 1 475 469 921 715 30 77020 Deutsche bank* 246 939 218 799 862 534 1 849 616 27 931
Total 20 banks 108 239 329 112 329 898 939 063 676 811 094 285 29 503 346 - Total Banking System 148 062 606 192 598 964 1 316 717 870 1 277 508 651 52 475 706 -
* - banks w ithout retail branch netw ork
Capital Assets
In M UAH, 1$ = 23 UAH
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Banks’ Financial ResultsIn M UAH, 1$ = 23 UAH
ROAA (return on Assets)
ROAE (return on equity)
No Bank 01.01.2015 01.10.2014 01.07.2014 01.04.2014 01.01.2014
1 Citibank 1 379 830.83 1 106 819.82 803 624.81 619 181.54 483 373.88 16.7% 100.84%2 Privatbank 749 036.10 426 956.54 387 230.37 293 763.91 1 873 391.70 0.4% 3.48%3 VTB bank 642 795.07 745 614.97 1 026 119.51 1 255 456.93 -194 041.75 2.1% 15.50%4 ING bank 228 880.19 -174 191.66 358 669.07 130 655.86 76 121.69 2.1% 13.01%5 Sberbank of Russia 108 048.92 104 175.68 115 583.76 103 649.52 572 788.09 0.3% 2.85%6 Credit Agricole 90 415.55 383 061.58 472 860.01 273 632.50 368 745.41 0.5% 5.87%7 SEB Corporate bank 30 770.19 26 628.46 16 443.44 6 623.22 12 033.98 2.6% 10.56%8 Delta bank 46 277.81 228 116.37 192 862.89 72 565.80 302 701.02 0.1% 1.15%9 Deutsche bank 27 930.67 20 029.78 11 429.05 5 127.22 22 441.21 2.1% 11.99%10 Finance & Credit -215 673.98 -48 591.25 -51 440.33 -54 745.93 6 256.01 -0.7% -9.07%11 Piraeus bank -323 826.96 -188 142.77 -101 733.48 -40 809.15 -173 007.22 -11.3% -69.01%12 Alfa bank -744 049.83 979.49 3 900.08 2 372.97 13 079.77 -2.3% -19.30%13 Ukrsibbank (BNP Paribas) -870 137.83 -732 150.06 -437 589.66 -273 189.76 24 503.08 -3.4% -39.28%14 Raiffeisen Bank Aval -1 367 334.23 -1 368 650.61 -1 002 742.92 -943 068.55 730 045.45 -3.0% -20.43%15 OTP bank -1 999 096.67 -1 311 126.47 -995 311.15 -678 446.80 117 292.69 -9.9% -84.45%16 Ukrsotsbank (UniCredit) -2 662 246.89 -1 547 309.97 13 098.38 23 229.13 10 987.89 -5.8% -35.72%17 Ukrgazbank -2 801 124.04 6 875.50 67 730.52 64 534.11 1 001 972.53 -12.5% -91.95%18 Prominvestbank -3 453 846.29 1 076 832.76 874 621.40 549 580.03 -2 575 268.61 -7.5% -60.28%19 Oshchadbank -8 564 446.19 550 899.28 340 009.83 155 775.04 678 784.33 -7.4% -39.65%20 Ukreximbank -9 805 548.50 -3 951 042.63 109 480.81 63 774.61 198 615.56 -8.9% -62.02%
Total 20 banks 29 503 346.08 - 4 644 215.19 - 2 204 846.38 1 629 662.20 3 550 816.70
Profit / Loss
01.01.2015
Source: NBU
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Banks’ Financial Results (cont.)
Source: NBU
23
Bank’s Clients’ Assets and LiabilitiesJanuary 1, 2015 In M UAH, 1$ = 23 UAH
No Bank Total UAHForeign
CCY
Reserves as % of total
Loans
Reserves as % of Oct 1,
2014 Total UAHForeign
CCY Total UAH Foreign CCY
1 Privatbank 161 338 726 69% 31% 15% 15% 141 338 369 46% 54% 88% 58% 152%2 Oshchadbank 69 271 838 64% 36% 37% 23% 55 368 183 69% 31% 80% 86% 70%3 Ukreximbank 52 093 575 33% 67% 47% 33% 60 125 796 34% 66% 115% 118% 114%4 Delta bank 44 784 754 65% 35% 9% 8% 35 627 854 53% 47% 80% 64% 108%5 Prominvestbank 38 500 679 23% 77% 15% 4% 13 682 619 50% 50% 36% 77% 23%6 Sberbank of Russia 37 692 112 11% 89% 11% 9% 14 934 713 26% 74% 40% 95% 33%7 Ukrsotsbank (UniCredit) 32 490 498 34% 66% 38% 34% 22 500 826 56% 44% 69% 116% 45%8 Finance & Credit 29 864 425 62% 38% 7% 8% 22 040 922 44% 56% 74% 53% 108%9 Raiffeisen Bank Aval 29 705 240 58% 42% 47% 48% 28 800 408 66% 34% 97% 111% 78%10 VTB bank 29 285 964 18% 82% 11% 14% 7 900 171 59% 41% 27% 89% 13%11 Alfa bank 25 609 183 43% 57% 15% 13% 18 060 830 45% 55% 71% 74% 68%12 OTP bank 16 017 576 41% 59% 29% 28% 14 003 139 49% 51% 87% 105% 75%13 Ukrsibbank (BNP Paribas) 14 904 777 49% 51% 14% 13% 17 424 364 57% 43% 117% 138% 97%14 Credit Agricole 14 529 800 57% 43% 12% 7% 17 625 200 62% 38% 121% 131% 109%15 Ukrgazbank 10 034 858 72% 28% 75% 45% 12 368 091 54% 46% 123% 93% 201%16 ING bank* 9 172 119 16% 84% 3% 8% 2 461 915 51% 49% 27% 84% 16%17 Citibank* 2 550 039 93% 7% 4% 3% 7 223 239 78% 22% 283% 237% 948%18 Piraeus bank 1 320 903 21% 79% 10% 17% 1 215 339 52% 48% 92% 230% 55%19 SEB Corporate bank* 1 173 942 33% 67% 0% 0% 222 455 80% 20% 19% 46% 6%20 Deutsche bank* 241 852 100% 0% 0% 0% 403 700 80% 20% 167% 133% 0%
Total 20 banks 620 582 860 493 328 134
* - banks w ithout retail branch netw ork
Client's Loans Clients' Funds / LiquidityLiquidity Ratios (Clients' Funds /
Clients; Loans)
Source: NBU
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Foreign Banks in Ukraine – March, 2015
Source: NBU, Public internet sites
International Banks (15) Russian Banks (8)
OTP Bank Hungary
Since 2006
ProCredit Bank Germany
Since 2001
ING Bank Ukraine Netherlands
Since 1994 – RO; 1997 – Subsidiary
Citibank Ukraine USA
Since 1997
BM Bank
Since 2006
Sberbank of Russia
Since 2007
Alfa-bank
Since 1993
Forward Bank
Since 2006
Petrocommerce Bank-Ukraine
Since 1996
VS Bank Sberbank of Russia
Since 2012
VTB Bank
Since 1992
Prominvestbank Vnesheconombank
Since 1992
Banks with foreign investors (4)
Piraeus Bank Piraeus Bank S.A.
Greece Since 2007
Raiffeisen Bank Aval Raiffeisen Bank International
Austria Since 2005
Ukrsibbank BNP Paribas S.A. France
Since 2006
BTA Bank BTA Bank
Kazakhstan
Since 1992
Idea Bank Getin Holding S.A.
Poland Since 1991
Credit Agricole Credit Agricole S.A.
France
Since 2011
Marfin Bank Cyprus Popular Bank Co Ltd
Cyprus Since 2007
Universal Bank Eurobank Ergasias S.A.
Greece Since 1994
Ukrsotsbank UniCredit S.p.A.
Italy Since 1991
Deutsche Bank Germany
Since 1993 – RO; 2009 – Subsidiary
Credit Europe Bank Turkey
Since 2007
Creditwest Bank Turkey
Since 2007
SEB Corporate Bank Sweden
Since 2012
Pravex Bank Italy
Since 2008
KredoBank PKO Bank Polski
Poland Since 1992
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Foreign Banks in Numbers – 2015 vs 2008
Source: NBU, Public internet sites
January 2008 January 2015
64 45 # of foreign banks in Ukraine
47 26 # of banks with foreign capital less than 100%
17 19 # of banks with 100% foreign investments
35% 32,5%(1) Foreign capital's share in banking system capital
Banks with foreign capital in Ukraine (by number of banks)(1)
Capital ownership structure of the banking system in Ukraine(1)
Foreign banks in dynamics
(1) As of December 2014
100%
100%
0
18
35
53
70
Foreign banks in Ukraine Banks with 100% foreign investments
20082015
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Foreign Banks Leaving Ukraine: 2009-2014
Source: Public internet sites
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Currency Regulatory Controls – Ukraine (as of Mar, 12, 2015)Inflows ● 75% obligatory sale of all FCY incomings into the country (incl export proceeds, x-border loans, investments) *
● Stringent documentation requirements for x-border FTs (documents to be submitted by clients to processing bank for validation)
● Export of goods/services - payment should arrive to Ukraine within 90 days ● X-border loans require registration with National Bank of Ukraine (NBU) prior to drawdown ● Transactions in FCY between two Ukrainian residents are prohibited ● Offsetting of mutual monetary receivables/payables in FCY is banned for export operations *
Outflows ● Stringent documentation requirements for x-border FTs (documents to be submitted by clients to processing bank for validation). Each FCY FTs can be processed only after receiving approval from NBU on T+3 basis, subject to provision of tax certificate and some other docs in some cases. T+3 for FCY FTs is not applicable if the FCY was previously purchased with NBU confirmation.
● Restriction for FCY prepayment: - For prepayments under contract or for cumulative monthly prepayments values of several contracts with
single non-resident with amount above $ 50 k and up to $ 500 k is subject to confirmation from NBU and is executed on T+3 basis after respective FX perchance confirmed. One transaction per day, per one non-resident is allowed.
- For prepayments under contract or for cumulative monthly prepayments values of several contracts with single non-resident with amount above $ 500 k are possible only if made under Letter of Credit confirmed by bank with investment rating (by Fitch Ratings, Standard & Poor’s, Moody’s). (except “Critical Import” **)
- For contracts (i) with no contract amount defined – starting Feb, 24 bank will apply the above rules once accumulated payment amounts reaches $ 50 k or $ 500 k threshold; (ii) with defined contract amount - factual residual unpaid amount as of Feb, 24 will be taken into consideration for applicability of above rules.
- FX purchases of prepayments under contracts exceeding $ 500 k are allowed: (i) for providing cash collateral to make payments under Letters of Credit; (ii) payments to non-resident banks for services under Letters of * - restriction/limitation is valid till June, 3, 2015 inclusive
** - exception for “Critical Import” is valid till April 03, 2015. Critical Import list is set out in Article 5 of the Law of Ukraine "On measures to stabilize the balance of payments of Ukraine in accordance with Article XII of the General Agreement on Tariffs and Trade 1994"
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Currency Regulatory Controls – Ukraine (as of Mar, 12, 2015)
Corporate Foreign Exchange Transactions
● LCY loans/overdrafts are prohibited for FX purchase transactions ● LCY loans/overdrafts are prohibited if FCY balances/deposits held with the bank are used as collateral* ● FX purchase is prohibited if Client’s accumulative FCY balances on current/deposit accounts (in all the banks where
accounts are held) exceed $ 10 k **. Written confirmation from Client is required. ● FX purchases (prepayments only) under contracts exceeding $ 500 k are allowed: (i) for providing cash collateral to
make payments under Letters of Credit; (ii) payments to banks under Letters of Credit ● FX can be done only with Ukrainian resident bank ● FX purchase is effected at T+3 basis (LCY should be supplied to internal bank's account at T+0) and subject to
reporting to NBU * ● Stringent documentation requirements for FX purchase. Each FCY purchase exceeding $ 50 k can be processed
only after receiving approval from NBU and supported with Tax Office Certificate of absence of debt. LCY/FCY Deposits Onshore
● Cash withdrawal from FCY accounts/TDs upon maturity is allowed in UAH 15 k equivalent (approx. $ 0.6 k) per day* ● Cash withdrawal from LCY accounts/TDs upon maturity is allowed in UAH 150 k (approx. $ 6 k equivalent) per day* ● Funds from TDs in LCY can be withdrawn prior to maturity based on contractual conditions of TD ● Funds from TDs in FCY prior to maturity can be repaid by the bank in LCY *
LCY/FCY Deposits Offshore
● Ukrainian resident companies can open accounts off-shore with Central bank license ● UAH/USD FX transaction can not be done offshore (UAH is not freely convertible currency)
Intercompany Lending between Resident and Non-resident
● X-border loans require registration with NBU prior to drawdown ● Prepayment of x-border loans is not allowed, except for prepayment of existing loans using proceeds of a new cross
border loan with longer tenor*
* - restriction/limitation is valid till June, 3, 2015 inclusive ** - Exceptions: deposits placed before March 4, 2015; FCY are pledged; balances are held with ‘insolvent category banks’ or with ‘Temporally Administration’ or ‘Under liquidation’
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Military Conflict in Ukraine*
*This slide and its figures and data is from the Ukraine Ministry of Finance Investor presentation dated March 13, 201530
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