Simulated

National Bank promises to refinance the banks for 5 years at 10-13% per annum, if they agree to lend to the economy under 15 %…

National Bank promises to refinance the banks for 5 years at 10-13% per annum, if they agree to lend to the economy by 15%. But the bankers themselves are unlikely to make haste to take credit NBU on such terms

National Bank intends to offer commercial banks a new type of refinancing - the so-called incentive loans with maturities from one year to five years. These resources control commercial banks will be able to send only the lending of new investment projects implemented by producers.

Stimulus is
   

National Bank has recently developed and sent to market participants to discuss the draft regulation on granting the NBU other banks to stabilize their work and stimulate credit to the economy of Ukraine for the period of its withdrawal to pre-crisis settings. Recall: Now according to the decree NBU № 378 from 26.09.06 “On the regulation of banks” liquidity, the National Bank of Ukraine” the regulator should issue loans to refinance solely to maintain liquidity or financial improvement of their wards.
   

idea of granting incentive credits interviewed bankers perceived positively. “It”s nice that the National Bank is already thinking about how to resume lending to the economy. There are many good borrowers who are ready to service loans, but banks can not always provide the necessary resources at an affordable cost,” - said Dmitry Gridzhuk, chairman of the bank Khreshchatyk ” . BUSINESS repeatedly wrote about the closing down banks, credit programs, which leads to a drop in the economy. Bankers recognize that the initiative for the NBU to stimulate the credit to the economy too late. In their view, the domestic economy is long overdue to saturate the credit resources, as did most of the countries of Europe and the United States.

At the same time, domestic banks can not lend because of the lack of an adequate resource base. Now corporate clients accommodated hryvnia deposits for a term not exceeding 3 months, the population - up to 9 months. This money is very expensive - about 20% per annum. “As credit through such resources? Only hope - for the regulator. In the absence of a market of cheap and” long “resources in the national currency is very important that the National Bank as soon as possible poured liquidity into the system, which can be sent to the lending economy,” — said Vladislav Kravets, board member Prominvestbanka.

Technologies and incentive credits may only be directed at lending a new investment project that meets fairly stringent requirements of NBU
   

However, market participants are severely criticized the proposed National Bank of the mechanism and conditions for granting incentive credits. The fact is that not all banks will have equal access to the new type of refinancing. Moreover, credit terms and cost of resources for all banks will be different. National Bank proposes to divide banks into four classes. Priority right to use the incentive funds will have state-owned banks (including the recently nationalized). They will be classified in Class “A” (the most reliable banks).

In addition, this category can be included and other banks with regulatory capital of at least $ 600 million UAH. As of December 1, 2009 this requirement shall be consistent with 41 financial institution. The volume of arrears of such banks should not exceed 10% of the loan portfolio. Of the 41 bank 18 does not fulfill this requirement. The class “B” should be classified a1000s banks with regulatory capital of at least 600 million UAH. This allowed the amount of delay up to 15% of the loan portfolio. These banks must adhere to prudential regulations, including implementation of the norm of compulsory redundancy, but over the last reporting month admitted violations of the norms of the instantaneous (H4) and the current liquidity (H5). The class “B” can be attributed to the volume of overdue bank debt on credit transactions not exceeding 20%. In the class “D” will include other banks that are not included in the more prestigious categories.

“The National Bank has the right to grant the bank assigned to a class not lower than “B”, incentive credit of up to 5 years (but no longer than the period stipulated credit project) as a one-time, and in the form of a credit line, depending on the needs its domestic producers, “- stated in the draft resolution. Banks are class “B” will provide incentive funds for up to 3 years, other banks - up to a year.

Earnings not

cost incentive credits will depend on the class of bank liquidity and the proposed security. Depending on the level of liquidity provision by enabling credit NBU offers divided into three categories. Surest guarantee of government bonds are considered (Government Bonds), they are referred to the 1-st category. At the same time the least reliable National Bank considers the provision in the form of property rights on loans (3rd category). Interest rate on loans stimulant - a discount rate, adjusted to 0,5-3 PM The degree of correction depends on the two aforementioned factors: the reliability of the bank and the liquidity of the collateral. Now the discount rate is equal to 10,25% per annum, thus, cost of funds for banks will be 10,75-13,25% per annum.

obtained at the price resources from NBU bank must send to the credit of the investment project at a rate no higher than 15.25% per annum (discount rate plus 5 percentage points). This means that the earnings (or margin) of the bank itself would be between 2% (if the bank is a class “D” borrows from the NBU loan secured 3rd category) to 4.5% (Bank “A” class, received refinancing secured by 1 — First category). Bankers say they do not agree to assume the risk of credit under such meager earnings.

“Risks of the lending bank must assess the adequacy of the size of the interest margin. It must be at least 5 percentage points,” - says Mr. Gridzhuk. With Vladislav Kravets colleague agrees: “In the current circumstances is more or less imputed margin - is 5 percentage points. Obviously, banks will be reluctant to use NBU refinancing for such conditions. “Most likely to work in such conditions would agree only state-owned banks. Do not be surprised if this order is made specifically for them,” - suggests chairman of a major bank with foreign capital, asked to remain anonymous.

deputy chairman of the bank “Contract” Paul Krapivin considers too high requirements of the National Bank to promote end-borrowers of loans. Indeed, the means of stimulating the credit may only be directed at lending a new investment project that meets fairly stringent requirements of NBU. For example, the share of the National Bank in the financing of the project should not exceed 50% of its value. When the borrower must provide the creditor bank to ensure value, twice the amount of credit.

“Portrait of the borrower, who may receive such credit, very idealistic. In practice, find a project that would meet the requirements of the NBU, very difficult,” - sure, Mr. Krapivin. Ex-deputy chairman of the National Bank of Ukraine Sergey Yaremenko doubt that cheap incentive funds will reach the addressee. &1000amp;quot;The private banks will be very tempted to send them to other purposes (such as currency speculation. - Ed.). To control use of funds NBU will be very problematic,” - experts warn.
  

The Ukrainian banking credit union (UCBU; Kiev more than 90 members) considered the draft decision rules discriminate against small and medium-sized banks. “These changes would create unequal competitive conditions, as well as advantages in obtaining incentive credits will only big banks,” - said in a statement UCBU. Representatives of smaller banks insist that it is the small banks could be even more effective when lending to new projects rather than large financial institution.

“It is not clear why the incentive funds would be available only through large banks. It turns out that banks have access to the resources of parent companies will be able to receive support from more and NBU” - Paul resents Krapivin.
    

Thus, bankers believe that the proposed National Bank of project provisions for the issuance of enabling credit needs serious improvement. Incidentally, we note that this is not the first attempt to revive lending bank regulator of the economy.
   

Last autumn, the regulator adopted a resolution number 650 dated 03.11.09, the document provides banks the right to dismantle part of the reserves established under the credit operations, and the released resources to extend loans to corporate customers. However, banks still have not availed themselves of a regulator of opportunities.

Dmitry Grinkov

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