Ratings of Ukrainian banks are compiled on a quarterly and annual basis. On its basis, one can trace the most important trends in the evolution of the financial market and identify the most successful and problematic companies. According to the final results for 2016, the best indicators are demonstrated by organizations supported by foreign capital. Among the 50 largest financial institutions of the country, Credit Agricole Bank is recognized as the most reliable.
Analysis of the situation
The working conditions on the Ukrainian banking market over the past 2 years are very stringent. Three things influenced this fact. Firstly, the loss of state control over part of the territory led to the loss by banks of control over part of the borrowers and collateral. On average, it is 15-20% of the total loan portfolio.
Secondly, the devaluation of the hryvnia more than 3 times made the servicing of foreign currency loans almost unrealistic. Even for those borrowers who want to repay them. As of the end of 2016 (according to the information of the National Bank of Ukraine) 47.8% of all loans are foreign currency. This is the equivalent of 327 billion hryvnia. It is these funds that should help banks return the equivalent of 404 billion hryvnias of deposits in foreign currency.
Thirdly, the decline in the real economy (even in hryvnia terms) and the growth of unemployment negatively affect loans.
Leverage
In these conditions, the main factors affecting the reliability of banks are:
- The desire of shareholders to stimulate the organization through investment (which involve risk).
- The desire of the National Bank of Ukraine to invest in saving banks.
- The ability to do this.
The larger the bank, the higher the desire to help him, but the more funds will be required for financial recovery.
Large foreign banking groups
So far, these are the most reliable banks in Ukraine that have proven themselves in the best way on the national market. The following institutions belonging to European groups are distinguished by strong positions: Raiffeisen Bank Aval, UkrSibbank (BNP Paribas), OTP Bank, Credit Agricole Bank, Kredobank (PKO BP), ProCredit Bank, Provex Bank Bank "(Intesa)," Idea Bank "(Getin).
However, even in this group there is a weak spot: almost all European institutions want to sell their Ukrainian assets. Moreover, in the past, sales to Ukrainian or Russian owners already led to bankruptcy in a few years. For example, this happened with problematic banks in Ukraine, such as Forum and Kreditprombank.
However, specialists do not take into account 4 financial companies that provide services only to large corporate clients: ING, City, Deutsche Bank, SEB. Credit Europe Bank (part of a group registered in the Netherlands, owned by individuals - citizens of Turkey) also serves small and medium-sized businesses, but not individuals.
Risk factors
The rating of Ukrainian banks owned by foreign companies is affected by the problems of the country of origin. This primarily concerns organizations from Russia, Greece and Cyprus. Russia is under international sanctions, suffers from a sharp drop in energy prices and the devaluation of its own currency. Greece has been in an economic crisis for 10 years and introduced in the summer of 2015 very serious restrictions on banking operations for its citizens. Cyprus in 2013 conducted a “reorganization” of deposits in the two largest banks in the country, replacing part of the depositors' funds with stocks that cost almost nothing.
Therefore, the possibility of banks from these countries to help their Ukrainian branches in the future raises questions. A complete list of banks with Russian capital: Ukrsotsbank, Prominvestbank, Sberbank of Russia, Alfa Bank, VTB Bank, Vieste Bank, Forward. Institutions from Greece and Cyprus include: Universal Bank, Piraeus Bank ICD, Marfin Bank.
The main motivation for these banking groups - to maintain their own reputation in the markets of Central and Eastern Europe - allows you to set lower deposit rates compared to local banks. Bankruptcy of the Ukrainian "daughter" may destroy this reputation.
Banks of Ukraine
State Ukrainian banks are not in good shape. However, the government and the National Bank are trying to support them in every possible way. During 2015, the state invested almost 20 billion hryvnias in the authorized capital of Oschadbank, Ukreximbank and Ukrgasbank, and in the first quarter of 2016 more than 14 billion hryvnias were additionally allocated.
The following banks have the highest rating of Ukrainian banks belonging to private capital: BNP Paribas, Credit Agricole, PKO BP (Kredobank). Their credit rating is investment: A1-A3 (highest average level).
Intesa (Pravex Bank) and Raiffeisen banking groups have a high level of reliability, and their credit rating is also investment: Baa1-Baa2 (below average). OTP and Procredit companies have rather high positions in the rating of Ukrainian banks . A positive point is the Procredit investment credit rating at the BBB level (Baa2 equivalent). The OTP credit rating is below investment grade Ba2, BB +.
The list of the most reliable banks
The list of Ukrainian banks is headed by Credit Agricole Bank. For a long time, this position was held by UkrSibbank. The top ten financial institutions are as follows:
- Credit Agricole (1st place), Raiffeisen Bank Aval (2) and Oschadbank (3) have the highest level of reliability.
- A high level is demonstrated by Kredobank (4) and Ukreximbank (5).
- In the middle of the top ten: UkrSibbank (6), Citibank (7) and ProCredit Bank (8).
- A sufficient level of reliability for UkrGazBank (9) and UkrSotsBank (10).
Trends
Private Ukrainian banks over the past 8 years are hopelessly behind. On January 1, 2015, according to the NBU, among the largest institutions, Delta Bank (now bankrupt) took 4th place in terms of assets, Nadra Bank - 11, Finance and Credit - 13. Now there are only two among the group of 14 largest banks owned by private Ukrainian shareholders. 100% of bankruptcies of the last 10 years are private Ukrainian banks.