National Bank of Ukraine clearly outlined its position on the Russian banks: their subsidiaries can not count on leniency in penalties, ie the possibility of new capital infusion. Thus, five entities of Sberbank, VTB and Vnesheconombank will inevitably have to change owners or reduce the presence in the country. However, experts believe that the NBU still will not force the issue with unnecessary requirements for Russian players, fearing the burden on Deposit Guarantee Fund.
"Given the existing sanctions, we cannot talk about the potential future capitalization of banks with the Russian capital," said the deputy head of the NBU Ekaterina Rozhkova yesterday at a press conference. According to her, Russian banks capital increase by conversion of previously attracted parent resources in capital mainly occurred. The sanctions prohibit the Ukraine to introduce new capital of Russia, but also permit to convert into capital the funds earker provided by the Russian parent company. "No development can so happen, because the build-up of assets leads to the need for additional capital," said Mrs. Rozhkova (quoted by Interfax): "For them, there are two ways: either to find a new owner or to gradually reduce their presence in the market." As the press service of the NBU explained Kommersant, it refers to the members of the VTB Group: VTB (Ukraine) and BM Bank, subsidiaries of Sberbank: Sberbank (Ukraine) and VS Bank, as well as Vnesheconombank-owned (VEB) Prominvestbank .
On August 14, 2014 the Verkhovna Rada of Ukraine adopted the law on sanctions. In particular, it suggests "the prohibition of increasing the authorized capital of the banks in which a resident of a foreign country (which intervened in the internal or external affairs of Ukraine), foreign government, a legal entity to which it is resident or a foreign country, owns 10 or more percent of the authorized capital or has influence on the management of the legal entity or its activities." As a result, this list includes all subsidiaries of Russian state-owned banks.
Ms. Rozhkova's words leave no illusions about the prospects for the subsidiaries of Russian state-owned banks in Ukraine: one way or another they have to leave. Thus, it becomes quite obvious that waiting for new concessions from the NBU or the lifting of sanctions to individual players listed above is not reasonable. In November last year, the NBU made an exception for the Ukrainian BM Bank included into the VTB group. Then the National Bank updated the procedure for the application of sanctions, permitting its capitalization; as a result the bank managed to avoid the loss of the license due to the decrease in capital below the permissible level, was additionally capitalized, and is now offered for sale.
The National Bank stressed that the decision on the further development of the strategy in the banking market of Ukraine towards the subsidiaries of Russian state-owned banks is the sole responsibility of shareholders and management of banks. Nevertheless, the choice of small shareholders is sale or minimization of the business. According to Ms. Rozhkova, VEB and VTB have chances to sell their Ukrainian subsidiaries. It noted that negotiations are already underway and there are several interested investors: both Ukrainian and foreign ones. "We will be glad if some investors will buy them and banks will continue to work," said Mrs. Rozhkova. But to find an investor for Ukrainian Sberbank will be very difficult as the bank is large enough, she added. However, for all banks the NBU has a universal recipe. "The bulk of the funding of the assets of these banks is due to the capital. They have not so much to repay, to pay for the obligations. And then they will be able to leave the financial market," explained Ms. Rozhkova.
Russian state-owned banks very cautiously reacted to yesterday's statements of the NBU. "It is planned that during the first half of the year the subsidiary Ukrainian bank will be sold," reported the press service of VEB. VTB press service did not respond to questions from Kommersant, saying that "the official position on the subject was published on the VTB Group page in Facebook". There are little details: "The Bank continues to negotiate with all interested parties for the sale of VTB Bank (Ukraine)." Sberbank left the topic without comment.
Experts believe that, despite the clearly defined position of the NBU, the Ukrainian regulator will not force the withdrawal of the Russian subsidiaries.
"With respect to the subsidiaries of Russian state-owned banks, as well as all banks in Ukraine, the regulator approved a plan for the formation of reserves and increasing capital adequacy ratio at the end of 2018 (each bank have its own), and as far as we understand, the banks are coping up with it," says analyst Elena Redko at Moody's. "I do not think we can expect that the NBU will apply some special requirements for the banks with Russian capital. In this case, there is likely to be a balance between political interests and the stability of the financial system since the Deposit Guarantee Fund of Ukraine is not unlimited, and subsidiaries of Russian state-owned banks are big players in the deposit market." The controller can not just close the banks with the Russian state capital, admitted Ekaterina Rozhkova, noting that they have 22 billion hryvnia ($815 million) of household deposits and 16 billion hryvnia ($592 million) of funds of Ukrainian companies.
However, the current situation for the Russian shareholders is obviously uncomfortable. "Now these banks have no problems with capital and liquidity," says the analyst of the banking sector ICU (Ukraine) Mikhail Demkiv. "However, under sanctions further development of banks with Russian capital in the Ukrainian market is not possible." At the same time real interest on the part of investors to the Ukrainian banks does not exist, same it true about most of the other assets of the country, said Executive Director of the International Blazer Fund Oleg Ustenko, "In the short term selling them is almost impossible," he said. "Evidence of this is the complexity of the privatization of all public facilities."