Against the backdrop of the latest rounds of devaluation, the National Bank issued Privatbank and Co. even more
2.5 billion UAH. A logical question arises about the possible connection of this and other “liquidity support” with the exchange rate depreciation of the hryvnia, the ratio of which to the US dollar has recently come close to 40.
Officially
On Thursday, February 19, the NBU board adopted a resolution to allocate a stabilization loan to Privatbank in the amount of UAH 2.28 billion for two years “to ensure the timely fulfillment of the bank’s obligations to individual depositors,” the press service of the National Bank reports. The institution also received the next tranche of a stabilization loan – for UAH 309 million (according to the NBU decision of December 4, 2014).
“When making this decision, the regulator was guided by the fact that PJSC CB Privatbank concentrated 26% of the volume of individual deposits in the banking system and 15% of the assets of the banking system, and the financial institution itself is the largest bank in Ukraine and has the status of a specialized savings facility (funds individuals account for more than 50% of the bank’s liabilities).
As collateral for a refinancing loan from the National Bank of Ukraine, an integral property complex and a guarantee from the owner of a significant participation in PJSC CB Privatbank were provided. The assessment of the collateral was carried out by one of the leading international auditing companies, which meets the criteria established by the regulations of the National Bank of Ukraine,” states the NBU.
At the same time, the central bank clarifies that last week two banks received stabilization loans worth UAH 2.665 billion. The National Bank also reports that the NBU has already provided the Finance and Credit Bank with the first tranche of UAH 76 million from the previously announced stabilization loan of UAH 700 million.
“One of the conditions for providing a refinancing loan to these banks is its use exclusively to fulfill their obligations to individuals,” the central bank said in a statement.
Unanswered Questions
However, it is not noted how exactly this condition is ensured in practice, since the ability of even the most qualified and most honest curator to exercise proper control over financial transactions in such a huge institution as Privat raises serious doubts. How does it remain questionable whether the regulator, before issuing a stabilization loan, conducted a proper check on the availability of alternative sources of financing in the bank, in particular, foreign currency funds in the foreign accounts of the bank and/or related structures?
We note that earlier – before the official publication of the message – ZN.UA sent a request to the NBU and Privatbank regarding the fact of issuing a stabilization loan, as well as details of the financing provided. Information on the NBU website appeared shortly after the institution received our publication’s appeal.
In addition to the above, we were interested in:
— Has CB Privatbank received the entire amount of funds it requested and is it applying for new amounts in the future? If yes, then to what extent?
— Does the National Bank see a relationship between the volume of operations to refinance/support liquidity of banks and increased devaluation pressure on the hryvnia?
— Does the NBU monitor the volumes of foreign currency holdings (that is, funds stored in foreign accounts) of Ukrainian residents (individuals and legal entities) and related structures? If so, what are they like today and what has been their dynamics over the past year? If not, then why is such data not collected, given the criticality of the situation in the foreign exchange market of Ukraine?
While we are waiting for an answer, in the meantime, according to sources of our publication,
Energy companies associated with the owners of the financial institution could provide collateral for a stabilization loan of UAH 2.28 billion for Privatbank. At the same time, they note that Privatbank asked the regulator for a stabilization loan of UAH 5 billion.
Let us also recall that according to official data from the National Bank, in January of this year it has already provided stabilization loans to Privat for UAH 2.38 billion (as well as to Ukrgasbank for UAH 520 million).
According to official statistics from the National Bank, in 2014 PrivatBank received from the regulator refinancing for a period of 30 days in the amount of about UAH 20.8 billion, with stabilization loans (provided for at least two years) of which amounted to UAH 9.9 billion.
On Thursday, February 19, the National Bank reported that refinancing for a period of 30 days or more, issued before the 16th of the current month, was received by 11 banks in the amount of UAH 400 million (among them Fidobank, Alfa-Bank, Khreschatyk, Kredit Dnepr”, “Kievan Rus”, Diamantbank, “Oxy Bank”, FUIB, “Idea Bank”, “Avant Bank”, “Financial Partner”).
According to experts interviewed by ZN.UA, bank refinancing could be one of the catalysts for the current fall of the hryvnia – both direct (bank speculation) and indirect (say, through the return of hryvnia deposits, for which bank clients buy currency on the market).
Although, it should be emphasized, this factor is not the only one. At a minimum, there is still an unsecured issue by the NBU through the monetization of government bonds to cover the state budget deficit (which the government does not dare to reduce. – Ed.); quasi-fiscal payments from the central bank to the state treasury (based on the excess of revenues over expenses last year); economic decline amid the war in Donbass; reduction in the influx of foreign exchange earnings of exporters; previously formed importer demand for foreign currency; withdrawal of currency abroad using fictitious import contracts; panic in the market, etc.
For reference
Let us clarify that from the beginning of the year until February 24, the government bonds portfolio at the NBU increased by UAH 20.2 billion (for the same period in 2014 – by UAH 14.5 billion). In January, this figure was UAH 9.6 billion.
According to the current version of the 2015 state estimate, the National Bank must transfer UAH 65.4 billion to the budget in terms of the excess of the central bank’s income over its expenses (which is actually an unsecured issue), and about 25% of this amount – before May 11 (in the draft state budget included in parliament by the government, it is envisaged that this amount will be reduced by almost
5 billion). Considering that traditionally the situation with revenues to the state treasury is the most difficult in January-February, it is during this period that the bulk of the corresponding NBU payments traditionally fall (specific data for last month have not yet been published).
According to official data from the National Bank, on Monday-Tuesday it provided banks with UAH 1 billion in refinancing, but these were overnight loans (brought out by banks mainly to comply with NBU standards), for the entire last week – for UAH 11.6 billion (mostly overnight) , which is more than for the entire January (UAH 9.88 billion). At the same time, we note that the NBU’s daily statistics do not include data on banks’ repayment of previously taken refinancing loans.
According to monthly data from the NBU (which were published for the first time recently), in January the balance (difference) between the volume of loans provided to banks and the Deposit Guarantee Fund and the volume of repayment of loans previously provided to them amounted to UAH 1.3 billion.
