Question of <I>The Day</I>
On November 26 President Leonid Kuchma, Prime Minister Anatoly Kinakh, and National Bank Governor Volodymyr Stelmakh held a special meeting to discuss the current situation and development prospects for the nation’s economy. Mr. Kuchma especially pointed out the need to ensure the effective performance of the financial and banking sector. It is an open secret that the scandals with Ukrayina and Slovyansky, this country’s largest banks, has tarnished the reputation of the banking system as a whole and made thousands of Ukrainians recall the times when the banking system collapsed in the last years of Soviet power and a large number of here-today-gone-tomorrow trusts sprang up during the first years of Ukrainian independence.
Dmytro SOBOLIEV , Deputy Chairperson, Bankruptcy Agency (that liquidated Ukrayina):
“I am certain there are a number of good and reliable banks in this country today, in which one can, of course, deposit money. I personally trust banks and keep my money in one. As to such banks as, for example, Slovyansky, it is the black sheep of the family, as a saying goes. On the other hand, there is always a certain degree of risk. The situation depends to a large extent on the bank’s management. Obviously, this is typical not only of our banks. Yet, the level of state guarantees to depositors abroad is just not comparable to what we have in Ukraine. For instance, in Canada, if a bank goes broke, the state guarantees the return of deposits worth up to $60,000 Canadian. As to our citizens who want to deposit a large amount with or entrust their finances to a bank, I would advise them to carefully study the given bank’s performance and investment conditions or, still better, seek advice from a consulting company.”
Oleksandr SUHONIAKO, President, Association of Ukrainian Banks:
“To answer your question, one must carefully look at what happened to these two banks. They were eliminated by administrative decision. In addition, we hear the authorities casting aspersions on the banking system as a whole. Of course, there must be constructive and focused criticism instead of general negative appraisals. The impression is that the authorities are unable to see what the real situation is.”
“For example, we have become accustomed to a relatively stable hryvnia and are not surprised that the share of loans in GDP was 17.1% as of October 1, 2001 (against 9.3% in 1999). The share of problem loans in the credit portfolio of banks has more than halved this year. Advanced economic crediting has risen by over 1.5 times. So the banking system has shown it is capable of promoting economic growth: one can and must trust it. Yet, in truth, the Ukrainian banking system also has some drawbacks: it is insufficiently capitalized due to a weak economy, Ukraine has too few banks (Russia has three times as many banks per million population), more than thirty banks are being financially revitalized or liquidated.”
Andriy SYSOLIATIN, director of business regulation, Ministry of the Economy:
“I can say that Ukrainian banks can be trusted in principle. The practice of bank bankruptcies also exists abroad, even to a larger extent than here. Banking is as much a business area as any other, so nobody is insured against risks in it. In my opinion, one should not put all one’s eggs in one basket: if you want to deposit money, you’d do best to do so in more than one bank. Moreover, there can be no universal criterion as to which, state or commercial, banks you should trust. When you decide to entrust your money to one bank or another, all you have to do is thoroughly study its reputation. Liquidity and reliability does not depend on the form of ownership.”
Vitaly MARHULIS, Director General, Association of the Consulting Firms of Ukraine:
“I do not think we should link the Ukrayina and Slovyansky situations with the reliability of the banking system as a whole. In my opinion, these banks were made bankrupt artificially. Somebody stood to gain. So it is senseless to make conclusions about the reliability of Ukrainian banks. I am sure we have banks that have shown good performance in the past few years, as well as banks that have failed to remain stable. In any case, before depositing money, one must study everything in detail. What is worse, no other banks are protected against what happened to, say, Ukrayina. This problem does not depend on the quality of management in one bank or another and must be solved first of all.”
Dmytro RYLIOV, entrepreneur:
“To my mind, one can only trust the well-established banks. It would be good if they employed people you know, who could explain to you the true situation. It seems to me some banks are not only very far from being reliable, but they resort sometimes to shadow practices. As to, for example, the Ukrayina Bank, this is a convincing example of nationwide shadow activities.”
