Bankers and stockbrokers have their own view of dirty money
On May 28 two major players on the Ukrainian financial market signed an agreement on cooperation. The Association of Ukrainian Banks and the First Stock Market Trading System (PFTS) have agreed to coordinate their efforts in lobbying the interests of investors. AUB head Oleksandr Suhoniako did not deny that this alliance is a reaction to signing of an agreement on cooperation between the National Bank of Ukraine and the State Tax Administration the previous week. “Our agreement can be viewed as a response to the unification of administrative structures,” Mr. Suhoniako said. Recall that the National Bank of Ukraine and tax authorities have declared that they will cooperate to obtain information on dubious bank transactions. On their part, bankers and brokers intend to pressure state structures into accepting such rules of the game that will ensure transfer to more transparent financial instruments.
Incidentally, no one has yet seen the text of the agreement between the NBU and STA. Oleksandr Suhoniako also admitted that he had not been able to get the copy of the document himself. He fears that with help from the NBU the tax authorities will impose on the banks inappropriate investigative functions, forcing them to evaluate the transparency of their clients’ transactions. “Any case of tax evasion can be viewed by state officials as money laundering, with all the negative implications for banks and their clients,” the AUB head maintains.
Meanwhile, the PFTS and AUB presented their own text of their agreement to journalists on the day of its signing. The whole document includes ten short paragraphs. “We have pinpointed the hottest issues that make the market nervous,” PFTS President Iryna Zaria stressed. Specifically, the PFTS and AUB plan to resume the circulation of promissory notes, improve conditions for the issue of corporate bonds, liberalize access by banks to bonds denominated in foreign exchange, simplify the taxation of natural persons’ transactions involving securities, and implement the use of electronic signatures. Iryna Zaria believes that Verkhovna Rada and the government are not fully aware of the role of the stock exchange in attracting investment in the economy, hoping, however, to send a strong signal to lawmakers and ministers with the help of the AUB. Oleksandr Suhoniako is also skeptical about the potential of the newly elected Ukrainian legislature.
The AUB and PFTS also intend to lobby for scrapping the concept of an industrial investor in the draft privatization program, something that limits access of banks and investment funds to sales of strategically important enterprises. “Banks are the most transparent investors, so why bar them from buying state property?” Mr. Suhoniako wonders. Meanwhile, the draft privatization program discussed by the government on May 28 retains the concept of an industrial investor. The draft was prepared by the State Property Fund. However, when the draft comes to Verkhovna Rada for approval, lawmakers may still make changes, and that is where the AUB and PFTS can enter the game.
Still, most observers do not think the tensions will increase, despite the emerging wrangling between STA-NBU and AUB-PFTS. There are enough people in both camps capable of reaching a compromise. Three out of the ten items of the AUB-PFTS agreement can be implemented only through the NBU and STA regulations. To remove the points of contention, it would be good if the STA-NBU agreement were implemented with the direct voluntary involvement of commercial banks and stockbrokers. However, it seems that the state prefers not to lay its cards on the table.
