ITALY IN UKRAINE: Ukrainian banking reform moving in right direction

Roberto Vercelli of Pravex Bank on challenges as Ukrainian banking undergoes deep reform process

ITALY IN UKRAINE: Ukrainian banking reform moving in right direction
Business Ukraine magazine
Sunday, 11 October 2015 15:28

How do you assess the banking sector reforms of the past year?

A lot has already been done in the Ukrainian banking sector, and much more is on the way. I appreciate the efforts undertaken by the government and the National Bank of Ukraine so far in such directions as the protection of investors’ rights, disclosure of information about financial institutions, and the introduction of a ban on early withdrawals of term deposits. However, I expect the continuation of reforms in these directions, strengthened by an improved legislative base. I look forward to a more transparent banking sector that will attract new investments and guarantee stable development.


What additional steps would you like to see taken by the National Bank of Ukraine to reform the Ukrainian banking sector?

To create a healthy banking environment it is necessary to do more towards implementation of the same rules for real and fair competition for all banks active in Ukraine. We have to find the right solutions to be more flexible in order to attract funds and investments.


How can the Ukrainian banking sector rebuild consumer confidence in the country’s banks?

Given the fact that the Ukrainian banking sector is interconnected with all other aspects of government and the economy, if the authorities carry out legislative transformation and the country pursues reforms, then the banking system will be able to finance all sectors of the economy. If all these components are working in the same direction, it will be possible to rebuild trust in all segments of the economy, including the country’s banking system.


Which segments of the Ukrainian banking sector do you expect to experience the most growth in the coming years?

I would identify corporate lending among the most promising banking sectors, in particular in the agricultural and renewal energy sectors. Facilitating the development of medium- and large-scale corporate companies will boost the business environment and create employment, therefore helping to restore the health of the Ukrainian economy. By aligning the Ukrainian banking sector with internal regulations and international rules, we can improve the private banking sector and offer more products focusing on asset management and the insurance business.


How has your business been impacted by the instability of the past two years in Ukraine?

The strong instability in politics, the economy and the social environment, including high rates of inflation and exchange rate fluctuations, have impacted heavily on the bank. The quality of the bank’s loan portfolio suffered the most – overdue payments grew while provisions increased. As the result, at present there are a significant number of issues to resolve regarding legal cases and investments. Strong enforcement of juridical leverage is required in this sphere.


How does the parent company of Pravex - ISP Group – support its Ukrainian subsidiary?

Pravex Bank has always received strong support from its parent company. During the current period of instability, ISP has provided for an increase of Pravex Bank’s capital up to EUR 115 million.


How can Italy help Ukraine?

Ukraine can exploit the experience of Italy in the development of the SME segment of the domestic economy. For example, progress can be encouraged via the creation and greater use of associations of smaller companies in order to help small-scale producers to develop a stronger presence on the market, and to become more bankable. Such associations can help companies prepare balance sheets and can provide other financial help.


About the interviewee: Roberto Vercelli (This email address is being protected from spambots. You need JavaScript enabled to view it.) is ISP Resident Senior Executive Officer in Ukraine and Head of the Special Coordination Office of Pravex Bank.

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