Why the number of banks in Ukraine has tripled during the war: an expert explains
15 July 2024 16:00
ЕКСКЛЮЗИВ
Since 2014, the start of hostilities, 118 banks have been withdrawn from the market in Ukraine for various reasons. This was reported by the National Bank of Ukraine at the request of "Komersant Ukrainian".
Most financial institutions disappeared from 2014 to 2024 – 109 banks. As explained by Andriy Novak, PhD in Economics, Chairman of the Committee of Economists of Ukraine, the reduction was due to the so-called “bank run” of 2014-2016, which was caused by the withdrawal of funds from these banks by their owners to offshore accounts.
the “bank run” is the largest and key wave of structural change in the Ukrainian banking system. The reason for this is that the owners of many banks have been emptying them for years, withdrawing capital abroad through their offshore accounts. As a result, almost the majority of Ukrainian banks have become illiquid. That is why they were gradually closed down, and some of them, such as Privatbank, were nationalised,” Novak explained.
But the “bank collapse” itself is primarily a consequence, not a cause. It happened because of the inadequate work of the regulator, the National Bank of Ukraine, which did not control the massive withdrawal of funds abroad.
“The NBU did not exercise proper control over the activities of banks. If the regulator had followed the rules, it would have prevented the massive withdrawal of capital from the country. The NBU has current information on its servers about all transactions of UAH 50,000 and more for each bank. With proper control, even the first signs of capital withdrawal should be suppressed by fines or criminal proceedings. Since the NBU allowed this, it means that it, in particular in the person of Ms Gontareva (NBU Governor in 2014-2018), was at least an accomplice in the capital withdrawal,” the economist believes.
In 2022, 71 banking institutions had a banking licence. Currently, only 62 banks have a licence (as of 4.07.2024), and 9 have been withdrawn from the market for various reasons.
In general, since the beginning of the full-scale invasion, Ukraine’s banking sector has been going through hard times: in 2022, the total profit of banks was UAH 24.7 billion. This is more than three times less than in 2021, when banks in Ukraine earned UAH 77.5 billion.
In 2023, the situation improved, with Ukrainian banks earning almost UAH 160 billion in pre-tax profit.
At the same time, this year, 2024, has been the best year for banking institutions since the full-scale invasion: in the first five months of the year, they earned almost UAH 68 billion in profit after tax. This is 27% more than in the same period last year.
Andriy Novak explains this positive trend by the fact that Ukraine has external financial assistance from various sources, which flows through the domestic banking system. In addition, a large number of citizens, including the military, receive fairly large salaries.
“Of course, most of these funds (military salaries – ed.) are placed in banks. Thus, banks have much larger amounts to operate with. In my opinion, as long as the war and external support continue, the banking system will be in positive dynamics,” the expert concluded.
Situation in the banking market from 2014 to 2024
As of 1 January 2014, there were 180 licensed banks in Ukraine. At the beginning of the full-scale invasion of Ukraine, 71 banks already had a banking licence.
During this time, 5 banking institutions were withdrawn from the market through reorganisation:
- JSC “BANK RENAISSANCE CAPITAL”,
- PJSC EXPRESS BANK,
- PJSC ViEs Bank,
- PJSC CB “Centre”,
- JSC UKRSOTSBANK.
By decision of the owners and with the consent of the National Bank of Ukraine – 3 banks:
- PJSC INVESTMENT AND TRUST BANK,
- PJSC “FINANCE BANK”,
- PJSC “FINEXBANK”.
As a result of termination of banking activities without termination of the legal entity – 8 banks:
- PJSC CB FINANCIAL PARTNER,
- PJSC “APEX-BANK”,
- PJSC “IFB”,
- PJSC “CREDIT OPTIMA BANK”,
- JSC “BM BANK”,
- PJSC “DIVI BANK”,
- JSC “VERNUM BANK”,
- PJSC “SETTLEMENT CENTRE”.
As a result of the National Bank of Ukraine’s decisions to liquidate banks located in the Autonomous Republic of Crimea and the city of Sevastopol and registered in the territory of the anti-terrorist operation, 3 banks were wound up:
- PJSC BSTDB,
- PJSC Bank “Morskoy”;
- JSC SP BANK.
As a result of the bank’s violation of the legislation in the field of prevention and counteraction, legalisation (laundering) of the proceeds of crime or terrorist financing and financing the proliferation of weapons of mass destruction – 4 banks:
- PJSC “BANK VELES”,
- PJSC CB “PREMIUM”,
- PJSC CB “SOYUZ”,
- PJSC “KSG BANK”.
Due to non-transparent ownership structure – 5 banks:
- PJSC “SMARTBANK”,
- CB “TK CREDIT”,
- PJSC “CLASSICBANK”,
- JSC “NC BANK”,
- PJSC BANK UNISON.
As a result of the completion of the liquidation of banks that were withdrawn from the market by establishing a transitional bank, 2 banks were liquidated:
- PJSC “OMEGA BANK”,
- PJSC “TERRA BANK”.
Liquidation of banks due to non-compliance with the requirements of Ukrainian legislation and regulations of the National Bank of Ukraine – 82 banks:
- ARTEM-BANK PJSC,
- PJSC BANK NATIONAL INVESTMENTS,
- JSC “BANK “FINANCE AND CREDIT”,
- JSC “BANK BOGUSLAV”,
- JSC “BANK ZOLOTI VOROTA”,
- JSC VTB BANK,
- JSC “Delta Bank”,
- JSC “ZLATOBANK”,
- JSC IMEXBANK,
- JSC CB LAND CAPITAL,
- JSC Misto Bank,
- JSCB ARCADE,
- PJSC JSB CAPITAL,
- PJSC “BANK “KIEVSKA RUS”,
- PJSC “BANK CAMBIO”,
- PJSC “BANK NATIONAL CREDIT”,
- PJSC “BANK PETROCOMMERCE-UKRAINE”,
- PJSC “VECTOR BANK”,
- PJSC “VAB Bank”,
- PJSC “DIAMANTBANK”,
- PJSC “ENERGOBANK”,
- PJSC Integral Bank,
- PJSC CB “ASSET-BANK”,
- PJSC CB Investbank,
- PJSC CB NADRA
- PJSC CB PIVDENKOMBANK,
- PJSC CB FINANCIAL INITIATIVE, PJSC PtB,
- PJSC “UKRINBANK”,
- PJSC “UKRKOMUNBANK”,
- PJSC UPB,
- PJSC Bank Kontrakt,
- PJSC BANK “TRUST”,
- PJSC CB EUROBANK,
- PJSC “FIDOBANK”,
- PJSC “BANK MIKHAILOVSKY”,
- PJSC PROFIN BANK,
- PJSC “ACTABANK”,
- PJSC “RADICAL BANK”,
- PJSC “COMMERCIAL BANK “DANIEL”,
- PJSC “REAL BANK”,
- JSC “BROKBUSINESSBANK”,
- PJSC “BANK FORUM”,
- JSC BANK MERCURY,
- PJSC CB INTERBANK,
- PJSC CB PROMEKONOMBANK,
- PJSC Zakhidinkombank,
- PJSC AKB Bank,
- PJSC STAROKIEVSKY BANK,
- JSC FINROSTBANK,
- JSC EUROGASBANK,
- PJSC CB USF,
- PJSC “GREEN BANK”,
- JSC CB EXPOBANK,
- Demark Bank,
- AB “PORTO FRANCO”,
- PJSC “PRIME BANK”,
- PJSC CB AKSIOMA,
- PJSC “INTERCREDITBANK”,
- PJSC “MELIOR BANK”,
- PJSC “CITY COMMERCIAL BANK”,
- PJSC BG BANK,
- PJSC “LEGBANK”,
- PJSC VBR,
- PJSC “UKRBUSINESSBANK”,
- AB UKOOPSPILKA,
- PJSC CB “STANDARD”,
- PJSC “JSB “KYIV”,
- PJSC “Kreditprombank”,
- PJSC “UKRGASPROMBANK”,
- PJSC AB “STOLYCHNY”,
- PJSC “USB BANK”,
- PJSC “UNICOMBANK”,
- PJSC “BANK “SOFIYSKIY”,
- PJSC “AVANT-BANK”,
- JSC “RODOVID BANK”,
- PJSC CB KHRESHCHATYK,
- PJSC “Derzhzembank”,
- JSC “FORTUNA BANK”,
- PJSC “FINBANK”,
- JSCB NOVY,
- PJSC “COMMERCIAL BANK “HEFEST”.
Situation in the banking market from 2022 to 2024
At the beginning of the full-scale invasion, 71 banking institutions had a banking licence in Ukraine. Currently, only 62 banks have a licence (as of 4.07.2024), and 9 have been withdrawn from the market for various reasons.
Liquidation of banks controlled by the aggressor state – 2:
- PJSC Prominvestbank
- JSC MR BANK.
As a result of the bank’s violation of the legislation on prevention and counteraction to legalisation (laundering) of the proceeds of crime or terrorist financing and financing of the proliferation of weapons of mass destruction – 2:
- JSC “IBOX BANK”
- JSC “JSCB “CONCORD”.
As a result of termination of banking activities without termination of the legal entity – 1:
- JSC “ALPARI BANK”.
Due to non-compliance with the requirements of the laws of Ukraine and regulations of the National Bank of Ukraine – 4:
- JSC “BANK SICH”
- JSC “MEGABANK”
- JSC “BANK FORWARD”
- JSC “UKRBUDINVESTBANK”.
Author – Alyona Kaplina
