UBBC attends Ukraine Banking day at Hogan Lovells

In a well-attended UKR banking conference at Hogan Lovells, organised by Strategy Council, delegates heard from many of the leading banks in UKR about their activities to modernise banking, current liquidity , growth and ambitions, and regulatory challenges  for their banks and country.

First up, National Bank of Ukraine, who provide liquidity to UKR banks in general and funds to a range of critical sectors. The stats are impressive; liquidity among most banks and UKR central bank is high, funds are available to businesses and within the system for lending, infrastructure, housing and individuals for reconstruction, and GDP is set to rise 4.5% in 2024 on the back of 5% in 2023. 30% of SMEs have closed since 2022 due to immigration, invasion, or collapse, but 34 % see growth and for those that remain they are thriving. Businesses in agriculture, Tech, infrastructure, and housing are set to grow. Central bank has over $40bn in reserves, and a fixed exchange rate is attracting overseas income from various sources, FDI, Private and Governments.

Overall, the picture is healthy, and banks are 3/5th of the way to compliance with EU regulations and accession. There is more to do in terms of transparency and ensuring banking boards are professional and objective, but those who get there will benefit from international standards and EU opportunities and the regulator is speeding up the EU accession process.

Monobank presented their view of the future, which is modern, international, professional, and tech driven with an app, that has acquired 8m customers thanks to covid and the war, which has speeded up online/ phone banking.

Oschadbank showed how their profitability, assets, bond folio and clients has doubled since 2020, and lending to SME among critical sectors is healthy and has supported activity – especially in Infrastructure, agriculture, oil and gas, food, roads trade, is robust and enabled continuity and expansion in these business sectors.They have ambitions to extend internationally beyond UKR, which is becoming a regular ambition among banks and other sectors like energy.

One of the key challenges is Human Capital, which needs to be up to speed with technology, regulation, and international standards, in particular there is a shortage of expertise in derivatives, securities and complex financial sectors that are standard in international banks.

Overall, the banking sector is profitable, expanding and has liquidity, so represents a very low risk for any FDI or foreign investors and businesses.