National Bank Warns...

January 30, Serhiy Tyhypko, head of the National Bank of Ukraine, presented a draft of the 2003-2005 development program for the Ukrainian banking system. He outlined the new objectives of the national banking system and offered his own views on its prospects. He said that Ukrainian banks should have a greater impact on the country’s economy and become a motivational force of economic growth. Consequently, they should help raise the standard of living in Ukraine. Mr. Tyhypko stressed that the banks should quickly respond to any changes in the domestic situation, while upholding the core value of providing stability of the national currency, of prices and the banking sector as a whole. Ukraine’s number one banker sees his top priority in gearing the National Bank to serve the benefit of the average Ukrainian (Viktor Yushchenko, former NBU President, also used to talk about protection of all those “small Ukrainians,” referring to the bankers as “big Ukrainians”). The actual difference between Yushchenko’s and Tyhypko’s approaches remains to be seen, but the fact that the new head of NBU, presenting his program, started with the task of lowering loan interest rates and prolonging loan terms seems quite important. To carry out this and other tasks, NBU plans to work out amendments to the current banking law and submit 16 new bills. At the same time, Mr. Tyhypko pointed out that no administrative measures could make the banking system get consolidated (what people actively discuss today): “Competition will show whether it will be merger or bankruptcy.” He also said that there is not much risk of a banking crisis in Ukraine, because the national financial system consists of a large number of small banks that are not strongly connected to others, so individual problems do not affect the whole system. In a word, lack of banking infrastructure may prevent the system crisis. Mr. Tyhypko further pointed out that the banking system lacks transparency and promised to work on stopping suspicious transaction, including money laundering: “We must know our customers and stay clear of dirty money.” He warned that if “certain banks abuse this principle”, they would soon “become aware of the NBU hand that will put an end to such abuse”. He informed that an NBU task force would be soon sent to Moscow to learn from Russian experience of dealing with proceeds of crime. Serhiy Kyroyants, member of the parliamentary finance and banking committee, taking part in the presentation, told The Day that money-laundering — rather, tax-evading — patterns in the banking sector of Ukraine are well known to all those concerned, and were the main reason for the FATF sanctions. He said that the new head of NBU is obviously fully aware of this problem.