KIEV- One of the main features of the Ukrainian banking system is restructuring and the main reason is the hard times and lessons from the economic crisis. There are only 10-15 banks out of almost 180 that are strong enough to collect important resources to survive. At the same time, in 16 Ukrainian banks are under administration and in the process of going bankrupt. Analyst Yuriy Romanenko in Khreshchatyk compared the situation with the crisis times in Turkey when only 35 banks survived a collapse there in the market. His forecast for Ukraine is that no more than 50 banks will survive. Another giant problem is the distrust of the Ukrainian population which shows that 80-90% have no faith in the banks, and that there are limited possibilities to get loans or external credit. In reality, the only possible way for businesses to get loans is to have good contacts in the leading banks. There is a huge lack of money in the banking system in Ukraine, and loans are offered at usurious interest rates of 25-33%, limiting the number of companies profitable enough to even apply for one. Interest rates in deposits are slowly sliding. A maximum interest rate indicated during spring 2009 showed 21% for deposits in hryvnias, 12.5% for deposits in dollars and 12% for deposits in euros. In times of crucial importance of money, some banks promised 25-26% in hryvnias and 16% in dollars. The drop of interest rates now is 0.5% for hryvnias and 0.1% for foreign currency. Experts say that the tendency of decreasing interest rates will also last until spring 2010. Oleksandr Sedykh, Financial Director of the Company ProstoBank Consulting, said that with the lack of financial resources banks in Ukraine began to resume some lending anyway. But here the main problems are too high percentages (28-30%), shorter maturity (five years instead of seven for a car loan,) high prepayment (may be equal to 50%.) But some years ago it was possible to get credits without any prepayment. Now the maturity for a mortgage is only two years, and last year it was 30 years. In this case, the important question becomes national currency stability. Romanenko said that the Ukrainian hryvnia has counterfeit stability which was formed because of the election. He also mentioned that the first problem for future Ukrainian president would be the problem of hryvnia’s devaluation. In ProstoBank Consulting, analyst discussed the relative stability of the Ukrainian national currency. In fact, there are no arguments in favor of such a huge drop as was indicated last year: from five hryvnias per dollar to 12-14. The National Bank of Ukraine will try to hold exchange rate at the level 8-8.5 hryvnias per dollar. One of the last characteristics of the Ukrainian financial market is the increasing price of commercial gold. Basically, in the world there are few global financial instruments: American currency, gold and oil. With decreasing dollar exchange rate gold increased its value as a substitute. Last year because of growing demand, the price of gold went up from 140-160 hryvnias to 240.

By Iryna Demko in Kiev