Bestseller for a Banker

An event long awaited by bankers in Ukraine took place late last week. This was the founding meeting of a company tentatively called the Credit History Bureau. Despite bankers’ professional vigilance and prudence, all kinds of rogues — sometimes very experienced ones — keep roping them in with bad credit. Now all those involved in unfair practices, as well as the practices themselves, are going to be spotted and exposed in credit histories. International experience shows that this will help reduce the occurrence of this type of bank fraud.

It is not just bankers who stand to benefit from this but also those who deal with bank credits, including employees who often earn their wages from the borrowed funds, but not without the interest that accrues for enterprises, thus reducing their income and profits. If the risk of credit default is reduced, banks’ interest rates can also be reduced.

The credit history story has been dragging on for two years. At last, 30 banks headed by the Association of Ukrainian Banks, which was a real powerhouse in this matter, and two insurance companies have reached the home stretch. They intend to register the Credit History Bureau on June 20. By that time 4.25 million hryvnias’ worth of authorized capital will have been formed out of small (UAH 50,000) and large (UAH 250,000) contributions by the founders.

Large financial institutions, like Privatbank, were not among the bureau’s founding fathers. According to Borys Tymonkin, chairman of Ukrsotsbank’s board of governors, Privatbank is absent for the simple reason that its market share is too large, and it wanted to have a corresponding one in the bureau. But the bureau’s founders are guided by considerations of large or small contributions, not the market. “Privatbank is probably going to establish a similar credit bureau. This is normal when several entities are entering the market and competing with each other,” Mr. Tymonkin added.

Two weeks should suffice to resolve all the technical problems related to the registration period. The founders worked hard during their meeting, unanimously approving a new name to protect the bureau from copy-cats: the First All-Ukrainian Credit History Bureau (CHB). Mr. Tymonkin was elected chairman of the supervisory board and Yuriy Blashchuk, who heads the International Mortgage Bank’s board of governors, was appointed deputy. CHB vice-president Antonina Palamarchuk and Liudmyla Rasputna, chairperson of Kredytprombank’s board of governors, were elected general manager and chair of the auditing commission, respectively.

It was decided to open a cumulative account (to facilitate auditing) in order to form the bureau’s statutory capital. Kredytprombank was also chosen by a unanimous vote; no other alternate candidates were proposed. Ms. Palamarchuk was frankly astonished. “Is it possible that no bank wants to service such a huge current account?” she asked.

Ukraine now has its first credit history bureau. The people elected to its governing bodies have proved that they are ready to get down to business immediately after registering and obtaining an Antimonopoly Committee license. Bureau employees already have a slogan: “I Serve the Banking Community.” The only problem is that the juridical groundwork has not been laid. So far, a law to create the bureau has only passed the first reading. It is high time to break this impasse.