2000

2017

Sergiy Lesyk, Silk Road Bank, supervisory board member

Banking in the modern world

Silk Road Bank AD SkopjeDame Gruev 1Skopje, MK-1000 Republic of Macedonia

March 2017

Major financial earthquake in 2008❖ The global crisis of 2008 shook the banking system globally down to

foundations❖ Big old banks were on the brink of collapse and had to refinance one

way or another, just a few examples:❖ UBS AG (Switzerland) was bailed out by the Swiss government (6 bn

CHF)❖ Royal Bank of Scotland (UK) was partly nationalised (GBP20bn

injection in debt and equity)❖ Citibank (US) was rescued by the US government (USD45bn in two

tranches)❖ Lehman Brothers went bust (it took more than 5 years to untangle

all the contracts and liabilities)❖ The governments and financial regulators had to react

Tectonic shifts as a reaction

❖ Ample liquidity, low interest rates;❖ De-mediation;❖ Increased reserve and capital requirements, moving from Basel II

to Basel III:❖ subsidiaries❖ geography❖ non-core activities

❖ Personal responsibility of compliance officers❖ FATF and FATCA become more stringent❖ Nothing personal, just risk management

Ukrainian domestic events❖ Entangled interests of elites❖ Difficult to understand❖ Very few clean success stories❖ Endemic proverbial corruption❖ Problems in demonstrating source of funds❖ !!! some good news - NBU relaxed foreign

accounts rules

Implications for clients❖ some clients were asked to close their accounts❖ some banks stopped working with some countries particularly ex USSR❖ banks are asking to provide more information on themselves and more

detailed information on the transactions❖ stop list of individuals expanded❖ some banks do not have enough resources to tell a a difference between

Yanukovich and Yushchenko and sometimes block genuine clients and genuine transactions

❖ some banks assessed that potential revenues are much smaller than costs of compliance

❖ USD transactions are mostly under control❖ Fewer participants -> Less competition -> higher costs (transaction and

interest rates)

It is not all over❖ Further implementation of Basel III❖ Cleaning up of the banking system is not finished, licenses are

being revoked and corresponding relationships, particularly in USD are being closed

❖ Banks in the Baltics are continuing clean-up, closing client account, rising tariffs.

❖ Italian banking system is not healthy, Monte Paschi di Siena, case in point

❖ German banking system is not healthy, DB is under investigation

❖ There are renewed issues about the Greek banking system

What is next

❖ Crypto-currencies (Bitcoin, Etherium), mobile money, new non-SWIFT payment networks

❖ IT impact, total supply management (Blockchain)

❖ Further de-mediation (Direct payments, Peer to peer lending, crowdfunding)

New in banking -BlockChain

New in banking -BlockChain

Silk Road Bank offering❖ Silk Road Bank is one of the few offering off shore operating accounts in USD, EUR,

GBP, CHF❖ Republic of Macedonia is not part of the EU but part of SEPA (through Bank of

Italy)❖ Corresponding banks: DB-BT (USD), CS (CHF), Standard Chartered (GBP)❖ Two weeks, two stage opening process:

❖ first stage: forms to fill in (one week to review), business description, initial document review (certificate of incorporation, copies of the passports of UBO and signatories, CoGS - no later than three months)

❖ second stage: any additional documents request (depending on corporate structure and nature of business) and review (one week for review)

❖ Original opening forms, agreements and notarised copies of the passports, CoGS are sent to finalise account opening.

❖ Tariff structure is flexible and negotiable (available on the web site www.silkroadbank.com.mk )

Thank you

❖ Thank you!❖ Feel free to ask more questions:

❖ Sergiy Lesyk❖ Andrew Dresvyannikov (Abbottpm – UK

+Kiev) ❖ Irina Voyevodina (rep in Odessa)