Russian banks in Ukraine enlarged their client bases at the expense of Privatbank

Nationalization of Privatbank has played into the hands of Ukrainian branches of Russian banks. According to RBC, they have been able to attract a significant number of its customers and increase the deposit base.
Origin source
The fact that subsidiaries of Russian banks in Ukraine, had an active inflow of new customers began in November-December 2016 in connection with the situation around one of the largest banks in the country, Privatbank, was confirmed to RBC by several sources close to the bank.

In part, it was spontaneous. "We did not expect such an influx, and were forced at the end of the year to urgently increase capacity," said one of them. Another added that part of the bank's branches in December even extended the hours of operation, given the increased client flows. According to another source of RBC in one of the Ukrainian subsidiaries of Russian banks, some banks deliberately stimulated flow, offering to the customers, including those of Privatbank, more profitable services.

"The flow of funds was great, close to $1 billion The main beneficiaries of this flow among the Russian subsidiaries were Sberbank and Alfa-Bank," said one of the interlocutors of RBC. Another source said that this was not the limit, and the final effect would be visible only after some time.

As it was

RBC sources' infrormation is confirmed by the official statement of analysts.

"The outflow of funds from Privatbank became obvious at the end of last year against the backdrop of frequent rumors about the possible nationalization of the bank. Volatility continued in the first days after the nationalization, but provision of a state guarantee on deposits of individuals in Privatbank helped to stabilize the situation," said Fitch analyst Olga Ignatieva. "In the conditions of instability, the possibilities of other foreign financial institutions, including Russian subsidiaries, grew up," added Moody's analyst Elena Redko.

However, the Russian players became the beneficiaries of the situation around Privatbank along with other market participants.

Official caution

Ukrainian banks publish quarterly reports. And the report for the fourth quarter is not yet available. As a result, it does not seem possible to prove the trend with exact figures. In their qualitative assessments, the bankers mostly do not deny what has happened but comment about the situation very carefully.

Alfa-Bank representative told RBC that at the end of last year the bank experienced an increased interest from legal entities and private entrepreneurs. "Any shocks to bank number one in any country give a good chance to other players," said the representative of Alfa Bank. VTB is also careful in its estimates, while talking about customer demand stability. "Talking about the influx of deposits and growth in the customer base in the subsidiaries of banks with Russian capital in November and December 2016, we cannot say it was a trend. Against the background of a gradual reduction of interest rates for all players of Ukrainian banking market situation was stable enough," said the representative of the bank's press service. The result of the redistribution of the client base and funds is likely to be noticed, he added, no earlier than the end of the first quarter of 2017. Sberbank did not comment on the situation.

National Bank of Ukraine has not confirmed nor denied the information about the flow of funds due to the nationalization of Privatbank. There is only limited information that in November-December 2016 balances of deposits in solvent banks increased by 2.7% and decreased by 2.6% in foreign currency. "The outflow has caused increase in volatility in the foreign exchange market as a result of extension of the situational factors," said the representative of the bank's press service.

The first estimates

And yet, the first preliminary expert estimates already exist. According to the partner of Bain @ company, Yegor Grigorenko, for the Ukrainian subsidiaries of Sberbank and Alfa Bank, the inflow of retail liabilities was probably at least 10-15% of the base at the beginning of the year. According to some estimates, it means about 1 billion in dollar terms. "Now the question is whether the Russian banks can retain these customers. I think that they will, for at least 6-12 months: the inflow was due to a greater extent the relatively high financial stability of these banks in the eyes of consumers and diversified product portfolio, rather than price factors; these factors play quite a long time," he added.