Ukraine’s banking heyday came to a sudden halt with the economic crisis that whipsawed through the country in 2008. Some of the issues that fomented the fall would be familiar anywhere, including lax lending practices and eye-wateringly expensive merger and acquisition deals. Five years on and most of the country’s commercially oriented banks have implemented the lessons learned and professionalism in the Ukrainian banking industry has improved.
However, Ukraine’s banking sector as a whole lies in the doldrums, brought on by the government’s lack of will to tackle reforms in critical areas such as the judiciary. As a result, the gains from rising lending to retail and small and medium-sized enterprises (SMEs) and improving financial sector transparency have been offset by the departure of foreign banks, negligible lending and the inability to collect on non-performing loans (NPLs). This has also resulted in the increasing presence of conglomerate-serving pocket banks.
