finance & markets

Bankers believe in miracles

16.01.2015 | By Oleksandra Vasylieva

The main task for the government is creation of a favorable investment climate, which would raise funds for the Ukrainian economy. It is about protection of the rights of creditors, tax reform, and most importantly the judiciary system and restrictions on the foreign exchange market. But it will take a bit longer than the next year, said CEO at OTP Bank Tamas Hak-Kovacs

Almost all areas of economy should undergo reformation. Our problems are ultimately boiling down to two banal things corruption and bureaucracy. So, I would recommend to start with the basics total deregulation. The main thing is that it does not require any financial resources, but only the desire and political will. The less restrictions and permits, the more invests, both internal and external, with a corresponding positive impact on the processes in the country, says head of the General Banking Risks Department at Finance and Credit Mykola Voitkiv.

Financial experts point out that it is necessary to introduce planned changes in the fiscal system reduce the number of taxes to nine, reform the income tax based on financial results of businesses.

Record devaluation, growth of uncollectable loans and lack of development in lending have negative effect on all sectors of economy. Therefore, there is an urgent need for changes in the banking system. Regulation of the market should be carried out in two planes: monetary policy and supervisory functions.

First and foremost, Ukraine has to complete the process of withdrawal of small banks from the market. At the same time, we need to create proper conditions for the planned creation of provisions for operation of large troubled banks, as well as their capitalization or reduction of assets. Speaking of monetary policy, it is possible to say that the foreign exchange auctions are more efficient than administrative regulation, but the still existing informal constraints and psychological factors inhibit dynamics of market recovery, said HakKovacs.

I believe that no reform of the banking market will matter if it does not solve the problem of protection of creditors rights. We need to strengthen the borrowers responsibility for fulfillment of their loan commitments, which, in fact, are formed by deposits of the population, says Voitkiv. The banks bad debts, taking into account the already written off, reaches the level of hundreds of billions of hryvnia. This jeopardizes the return of depositors money and poses an obstacle for essential increase of the volume of lending to the real sector of the economy in the future. Financial institutions significantly toughened approaches to the evaluation of potential borrowers and quality of collateral, so even if interest rates are reduced and banks receive longterm resources, there will be no revitalization of lending, he added.

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