The World Bank is making it a condition for further loans that the state divests itself of its stock holdings in leading commercial banks — Ukrsotsbank, Prominvestbank, and Ukraine Bank.
Biznes reports that the state’s interest in Ukraine Bank is 12.774% of the statutory fund. Question: Who is going to buy it and with what money?
Operation 1.
Addition
President Kuchma declared September 11 that IMF and World Bank loans are the best for Ukraine, adding that Ukraine was spared repeating the Russian crisis by the EFF. If the IMF Board adopts a positive decision on the Ukrainian question $260 million will arrive “practically overnight.” This will place the National Bank of Ukraine on a firm footing, allowing it to conduct a balanced market policy and keep the hryvnia within the currency corridor (i.e., Hr 2.50-3.50 to the dollar)
Operation 2.
Subtraction
“There will be changes in the management of Ukraine Bank, and a new President will be appointed,” Premier Pustovoitenko stated at a meeting with heads of regional state administrations on September 14 (courtesy Interfax-Ukraine).
Operation 3.
Moving Decimals
The next day the Ukraine Bank press service published a statement advising of the resignation of Viktor Kravets, Chairman of the Board, due to his transfer to another post.
Operation 4.
More Addition
The World Bank resolved to continue to cooperate actively with Ukraine and provide a loan totaling $949.6 million.
The agreements have been signed, lending Ukraine $300 million for restructuring the financial sector, $16.4 mil. for Treasury development, and another $300 mil. adjustment loan for the development of enterprises (courtesy of Interfax-Ukraine).
Operation 5.
“What Did Not Happen”
The sale of Ukraine Bank stock on the Ukrainian Stock Exchange has not begun. Rather, it did start, but was ordered suspended by the State Property Fund, because the bank failed to submit a timely report to the State Securities and Stock Market Commission and did not register the new emission in keeping with set procedures.
No one knows when this operation will resume, not even the SPF and exchange people. The latter told The Day that Ukrsotsbank has submitted the required documents. Tentative forecasts indicate that Ukraine and Ukrsotsbank government share tenders may begin in a month.
Suggestion. In economics there is the good old method of buying profitable enterprises cheap. In banking, knowing that bank stocks will be put up for sale, it takes only several statements to cause a panic and have the stock price fall. Whether this trick is being pulled off and, if so, who is behind it, is currently hard to say. The fact remains that Ukraine Bank has had to publish a hurried statement urging its clientele to ignore hearsay and assuring that the bank will honor all commitments in full.
Statement of the problem. Serhiy Dubynin tenders his resignation which is granted.
Question. Where will NBU Governor Viktor Yushchenko go if, God forbid, the hryvnia’s decline cannot be stopped?
Operation 1.
Extend
An extended Ukraine Bank-NBU Board meeting was held. From the minutes: “Measures outlined to maintain bank liquidity and enhance its financial position at this time of ordeal, in view of considerable hardships in the economy and on the monetary and financial markets.”
Operation 2.
Lobby
Some Solons voiced their opinion in the Verkhovna Rada lobby that Viktor Yushchenko is preparing a reserve bridgehead if dismissed as NBU Governor. NBU people resolutely refute the possibility.
Operation 3.
Dolorous
The hryvnia is sliding. Now the dollar buys over three .
Statement of the problem. The Prime Minister describes Ukraine Bank’s condition as “very serious,” adding that the total amount of its frozen credits with agricultural producers approaches Hr 1,000,000,000.
Question. Why did he make this statement in a conference with heads of regional state administrations?
People’s Deputy Bohdan Hubsky: Ukraine is a very large bank. If it has problems its depositor organizations will be the first to suffer. And this means most agribusiness organizations. There will be tremendous difficulties in settlements, particularly with regard to the budget financing of agribusiness. If a bank of this caliber topples, it will trigger a chain reaction, and other banks will follow suit.
People’s Deputy Viktor Suslov: “Ukraine Bank has always been a semi-state enterprise, servicing government programs and supplying compulsory credit in agribusiness, so its present condition is something well to be expected. Its status must be finally determined: whether it continues taking orders from the Cabinet (in which case the bank should be nationalized) or becomes totally commercial, in which case it will not have to issue loans (which everyone knows will never be repaid) or finance ineffective programs.”







