According to estimates by the reputable rating agency Standard & Poor's, the total capital of Russian banks in Ukraine ranges from 23 to 25 billion dollars. Of these, $ 8 billion is the direct investment of parent institutions in their Ukrainian subsidiaries, and another 15-17 billion are loans issued in this country.
Russian banks in Ukraine
Which Russian banks in Ukraine are currently operating? At the end of 2016, seven banks with Russian capital were operating in Ukraine. These include Sberbank Ukraine and ViS Bank controlled by Sberbank. In addition, VTB Bank and BM-Bank are under the control of VTB Group. Prominvestbank is a subsidiary of Vnesheconombank. As well as Alfa Bank, which is part of Alfa Group, and Forward Bank, which is controlled by Russian Standard.
It should be noted right away that in 2016, the assets of Russian banks in Ukraine decreased, and very significantly. Thus, Sberbank Ukraine lost 9%, Alfa-Bank - 2.8%, BM-Bank - 6.3%, and VTB Bank - as much as 19.1%. Such indicators made Russian parent companies think about withdrawing from the Ukrainian segment of their activities. For example, VTB Group is now actively exploring the possibility of selling its part in the banking sector of Ukraine. By all indications, this particular Russian holding will be the next to terminate its business in Ukraine. At the same time, the head of VTB Group, Andrey Kostin, notes that selling BM Bank is likely to be somewhat easier than VTB Bank, because selling real estate at an affordable cost in Ukraine is now extremely problematic.
Exception to the general rule
It will be useful to say that not all Russian banks in Ukraine have encountered serious problems. So, Alfa-Bank is not going to leave the country. This is primarily due to the fact that this financial institution was not included in the sanctions list of the Ukrainian government.
According to one of the leaders of the group, Petr Aven, the main thing in this situation is to maintain normal working relations between Alfa Bank and the National Bank of Ukraine. Aven also said that the management of Sberbank has not yet made a proposal to buy out its subsidiary in Ukraine. Apparently, Vnesheconombank is not going to leave the Ukrainian banking sector yet. The basis for such allegations is the fact that
on March 27, 2017, a decision was made on additional capitalization of Prominvestbank for an as yet unknown amount.
Drop in profitability
Russian banks in Ukraine are faced with a sharp drop in their profitability. In the midst of the crisis of the Ukrainian economy, it was possible to raise funds from outside only at the highest rates. At the same time, the level of income from the issuance of loans was constantly decreasing, which was due to a general drop in the level of lending in Ukraine.
In addition, it should be noted that, in view of the above, the Ukrainian subsidiaries of Russian banks had to reduce deposit rates. This, in turn, negatively affected the possibility of attracting additional financial resources. It can be stated that at the end of 2016 and the beginning of 2017, bank lending in Ukraine practically stopped, and the growth of deposits in the previous months was due to extremely high deposit rates of that period.
It should be noted that in the list of the ten most unprofitable banks in Ukraine, five are Ukrainian subsidiaries of Russian parent enterprises. And the main loss was provoked by the requirements of constantly increasing reserves from the National Bank of Ukraine.
Political risks
Political events in Ukraine at the end of 2013 and the beginning of 2014 significantly increased risks, including for doing business. Given today's relations between the two states, it is especially difficult for Russian enterprises to work. Therefore, at the moment, for Russian banks, and especially with the participation of state capital, there are practically no options for a painless way out of this situation. The only acceptable one is selling your business in Ukraine. Will and how many Russian banks remain in Ukraine? This question is more relevant today than ever and there is no single answer to it.
The introduction of restrictions on the work of Russian banks
It must be emphasized that the banks of Russia in Ukraine that entered the sanctions list have actually lost the opportunity to conduct normal business in this country. The Ukrainian government has introduced a number of restrictions, among which there is a ban on the withdrawal of finances outside the Ukrainian economy, on the payment of dividends and interest, as well as the return of interbank loans and deposits. In addition, there is a restriction on the return of funds from correspondent accounts of subordinated bonds, as well as on the distribution of profits. In fact, the measures taken by the Ukrainian government state a ban on financial activities by Russian banks in Ukraine.