Financial aggression: Ukraine might close all the Russian banks

Author : Olena Hubar

Source : 112 Ukraine

The MPs propose to close the banks with Russian capital that are operating in Ukraine
18:15, 28 October 2016

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Russian Banks in Ukraine
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MPs propose to close the banks with Russian capital operating in Ukraine. According to the authors of the bill, they threaten the national security of Ukraine. At the same time, the closure could lead to loss of money of the Ukrainian citizens.

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Ukraine wants to ban the work of Russian banks. The corresponding bill was submitted to the Parliament by six deputies who are not members of any faction. They propose to oblige the National Bank to revoke the licenses of all banks, the shareholders of which are associated with the country, carrying out armed aggression against Ukraine. Also, the National Bank will have to refuse to grant banking licenses to all persons who are connected with the Russian Federation.

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Deputies consider the effect of Russian banks in the Ukrainian economy is too large.

Prospects of the initiatives

Since the beginning of the aggression against Ukraine by the Russian Parliament has repeatedly put forward the idea to close the banks with Russian capital. But until now, none of these proposals have not been approved. Now the situation has changed with the entry into force of amendments to the law "On licensing of economic activities", according to which financial firms, a significant participation in the capital of which is owned by Russian entities should lose the license. But this rule applies to all institutions other than banks. As a result, the Russian shareholders of Ukrainian insurance companies and stock exchanges have already sold these assets to other investors. In addition, the decree of the President of Petro Poroshenko has banned the work of Russian payment systems in Ukraine.

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The committee of the Verkhovna Rada Committee on fiscal policy and banking are also dissatisfied with the work of Russian banks in Ukraine. "The worst results during this crisis showed was the banks with Russian capital, but National Bank did not deny the support. Moreover, experts have suspicions about the fact that in the midst of crisis, Russian banks received large volumes of refinancing, and could use this situation to disperse dollar on the results of the joint meeting of our finance Committee with the Anti-Corruption Committee of the Parliament, we sent a letter of appeal with respect to possible threats on the national security and defense Council of Ukraine," the Committee chairman Serhiy Rybalka.

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Russian problem

Now six banks are operating in Ukraine with the Russian capital. Three of them are large institutions, owned by the state: Prominvestbank, Sberbank, and VTB Bank. In addition, there is a BM Bank, owned by the Russian Bank of Moscow, VC Bank, controlled by Russia's Sberbank and Bank Forward, owned by the bank "Russian Standard". Also, the Russian Federation citizens have minority shareholders, "Privatbank", "Alfa-Bank", bank "Trust" and "People's Capital." This year alone, the Russian shareholders to capitalize their Ukrainian subsidiaries totaling 33.2 billion USD: Vnesheconombank made a 20 billion UAH in capital Prominvestbank, VTB granted Ukrainian bank 8.9 billion UAH, and the SberBank - 4.3 billion UAH. So far with the Russian shareholders of the banks were not able to comment on the initiative of the Ukrainian deputies.

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Meanwhile, the National Bank says it is ready to comply with the law if it is adopted. "The bill provides essentially three things: the basis for the denial of a new bank (statute harmonization) and issue a license if the founder (beneficiary) of the aggressor country, ban on transactions with related parties, if they come from the aggressor country, as well as elimination of the bank from the market, if the connected persons of the aggressor country is not withdrawn, - reported in the National Bank -. The position of the National Bank remains unchanged - the central bank will fulfill the norm of law, if it is passed by Parliament and signed by the president of Ukraine."

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Civil influence

According to National Bank, now the share of Russian banks in Ukraine in terms of assets is 9 percent (112.3 billion hryvnia) of the total. Experts also hope that this bill will not be accepted, as the estimate of its impact on the Ukrainian economy as very negative. "On the banks with Russian capital now accounts for about 10 percent of assets, it is a lot if revoke their license is to be a new burden on Deposit Guarantee Fund, a large inflation and a new round of devaluation of the hryvnia, - says a member of the executive committee of the Ukrainian Society of Financial Analysts Vitaly Shapran. - In addition, banks with Russian capital, create jobs for our citizens, lend our company, and after all, are themselves held hostage to the conflict between Russia and Ukraine is very foolish to deprive them of the possibility to do it all for Ukraine."

Related: National Bank forecasts further decrease of export of Ukrainian goods to Russia

General obligations of Russian banks to the Ukrainian clients reach 38.5 billion USD, of which the citizens have entrusted them to 22.9 billion UAH. Therefore, the possible closure of Russian banks may painfully hit the citizens who hold deposits in them. However, Parliament insisted on a more decisive action on the Supervision of the Russian banks. "We need to monitor more closely the work of banks with Russian capital to our regulatory and law enforcement bodies and this should involve different structures. From the National Bank to the Security Service of Ukraine and the Financial Monitoring Service," says Serhiy Rybalka.

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