By Yevhen Hrebeniuk, Senior Analyst at Troika Dialog Ukraine
Ukraine’s Prime Minister Yulia Tymoshenko has outlined the resolution approaches that are set to be approved by the cabinet and applied to the two remaining large banks that have yet to be recapitalized: Nadra Bank and Ukrprombank.
The government will transfer Ukrprombank’s deposits and valuable assets to Rodovid Bank, which the state already bailed out in July. Ukrprombank will then be liquidated.
Tymoshenko expects that Ukrprombank’s retail clients will be able to begin withdrawing their deposits within one month’s time. She added that the government will do its best to complete Nadra Bank’s nationalization by end 2009, but mentioned that the National Bank‘s position regarding the matter is hindering the process, and that the bank’s external debt situation remains to be resolved.
Troika’s view: We view the move as one of several prerequisites for Ukraine’s banking system to begin recovering. As such, any progress in this respect is a positive development for the country’s financial system.
We also note that the decision to transfer Ukrprombank’s assets and liabilities to Rodovid Bank may require an additional capital injection for Rodovid Bank from the government, which increases the risk of further dilution for the latter’s minority shareholders. We maintain our SELL recommendation on Rodovid Bank.