Deputy Minister of Finance of Ukraine: the state to start withdrawing from Oshchadbank and Ukreximbank capital by mid-2018

Deputy Minister of Finance of Ukraine: the state to start withdrawing from Oshchadbank and Ukreximbank capital by mid-2018
February 15, 2016.

Kyiv, February 15, 2016.  State-owned banks may become the most efficient through their denationalization, the same as in other spheres of Ukrainian economy. The strategy for the state-owned banks approved last week by the Cabinet of Ministers of Ukraine, envisages the state will start withdrawing from the capital of two biggest state-owned banks, JSC Oshchadbank and JSC Ukreximbank by the middle of 2018. The same procedure will take place at smaller banks during 2016-2017, said Artem Shevalev, Deputy Minister of Finance of Ukraine at a press briefing at Ukraine Crisis Media Center. According to him, it will be the first step on the way to transformation of the state-owned banks.

The Deputy Finance Minister emphasized that the principles of transparency were being introduced into the work of the state-owned banks for the past two years. Nevertheless, the existing status makes them dependent on the political climate which is detrimental to the banks’ performance. The changes proposed by the Ministry of Finance will allow eliminating political risks. “We want to remove national assets administration in the banking sphere from political and administrative interference,” said Shevalev.

In order to reach the stated objectives, law-makers must change the rules of forming supervisory boards. They must become independent, for at present they consist of representatives delegated by different branches of power. The Cabinet of Ministers will submit the corresponding draft law to the parliament in the nearest future. Independence of supervisory boards will give a possibility to introduce generally accepted practices into bank management. “State-owned banks must work in compliance with the best international standards in the sphere of corporate management. Independent supervisory boards will guarantee this, providing new generally accepted approaches to cooperation between the management of the state-owned banks and representatives of a shareholder, the latter being the state, at least on the first stage,” said the deputy minister.

Shevalev informed that the path Ukraine is taking in the sphere of state-owned banks reforming is not unique. European experience proves that similar transformational processes supported by international financial organizations, namely European Bank for Reconstruction and Development (EBRD) and International Finance Corporation, achieved success.

Yuriy Blashchuk, advisor of the Minister of Finance of Ukraine on bank issues, said that the presented strategy of the state-owned banks development is the response to the present-day challenges and serves the purposes of the society, whose confidence in the banking sphere is essential. “Key change lies in making the management independent, isolating an official from bank activity. We managed to reach a compromise here,” said Blashchuk. The expert emphasized that it is necessary to engage serious western players on the initial stage. “They will help introduce the best practices of the corporate culture and corporate management in general,” emphasized the advisor.

Shevalev assured that ordinary citizens must not fear gradual withdrawal of the state from the state-owned banks’ capital. The state will de-facto bear responsibility for all the actions of the bank until it remains its major shareholder. Speaking of optimization of the banking institutions network, the deputy minister said that citizens will not be left alone with their problems. They still will be able to perform banking operations, regardless of their location.

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