A strategy for state-owned banks being designed will focus on settling the problem of competition between the financial institutions, first of all PrivatBank and Oschadbank (both based in Kyiv), Ukrainian Finance Minister Oleksandr Danyliuk has said.
“Oschadbank is competing with PrivatBank. I cannot criticize managers of the two banks for competition: they are commercial structures, they fight for clients and this is a normal thing. However, often in this competition banks forget about economic effectiveness, restricted capital and the necessity of comparing their decisions with their possibilities. The main goal of commerce is profit making, and not stealing clients from a rival at a sacrifice. This is the main problem that should be settled now, as the state could lose money,” he said.
Danyliuk said that the ministry was studying all options on how to solve the issue.
“I want a serious analysis carried out before announcing the strategy under development. I take it seriously, as when you own 50% of the banking sphere, the cost of a mistake is huge,” he said.
The ministry does not believe that it is appropriate to unite the two banks. Taking into account potential losses from competition of state-run banks the Finance Ministry does not rule out that the sale of one of them could bring smaller loss with the current small demand than support of the two banks.
“If we cannot sell it now, let’s think how to restrict counterproductive competition. The strategy should make so that there is no ineffective competition. Otherwise, the budget will pay for the ‘race’ of state-owned banks. Frankly speaking, we have got sick of paying,” he said.
Danyliuk said that the ministry was discussing the appropriateness of involving investors like the International Finance Corporation (IFC) or the European Bank for Reconstruction and Development (EBRD) in Ukrgasbank. If there is an opportunity of selling the entire bank, the ministry will sell it.
“Ukrgasbank is a good bank with good managers, interesting portfolio and products: let’s sell and forget! We will have energies and time for other tasks that the Finance Ministry has a lot,” Danyliuk said. (Interfax-Ukraine/Business World Magazine)