Banks and the Association of Ukrainian Banks

As of 1 January 1998, 227 banks were registered in the National Book for Registration of Banks, Currency Exchanges and Other Financial-credit Establishments, including two state-owned (Oshchadbank of Ukraine and Ukreximbank) and 17 banks with the involvement of foreign capital (as of 1 October 1997). Within 1992-1998, 42 commercial banks were excluded from this book. Currently, 186 banks operate in Ukraine. Also, much effort is being made to increase the number and upgrade the quality of banker's services as the Ukrainian financial market develops. In a highly competitive fight for profitable clients, banks are simply forced to do so.

Currently, commercial banks of Ukraine fulfill the cash servicing of legal persons, exchange business, servicing of traveler's cheques, transactions with T-bills, service the accounts of physical persons, and service of plastic cards.

Ukrainian banks take part in different international programs to support private entrepreneurship in Ukraine, such as EBRD credit lines, German-Ukrainian fund, etc.

As the share market develops, and more specifically the T-bill market, new services come into being, including the brokerage servicing of clients, and management of T-bill portfolios. There is a new task ahead — to work with municipal securities.

Credit activity of banks becomes more active. In addition to short-term credits, the volume of long-term credits is increasing. There is a tendency toward the decline of all kinds of interest rates on credits granted to direct loan debtors. A positive trend is observed concerning the improvement of the credit portfolios of banks. Confidence of the public with respect to commercial banks grows; the volumes of the deposits of the population with banks rose 380 times between 1992 and 1996.

In the terms of crisis phenomena in the economy of the country, just traditional credit transactions of banks are not able to ensure banks their due level of profitability. This is the reason for an enhanced tendency to universalization of banking and creation of a full-fledged market for banker's services. Among the high-priority directions of putting new services into practice, the following may be mentioned: trust transactions; consulting and informational services, accessory operations related to provision of economic activity of the clients, and improvement of traditional banker's services, including deposit-loaning services.

In 1990, the first 9 commercial banks united for the advocacy of their interests into the Association of Ukrainian Banks, which now unites 124 banks and four regional bank unions.

During the period of its activity, the AUB became established as an efficient and influential organization that contributed to the progress and stabilization of the banking system.

The AUB considers participation in the legislative process one of most essential directions of its activity. The Association was an active contributor of the elaboration of the Law of Ukraine «On Banks and Banking Activity.» Tax legislation was and still is in the focus of the AUB's attention. The AUB, together with the NBU, achieved parity between banks and other business entities in taxation.

The AUB took active part in the preparation of the Law of Ukraine «On Amendments to the Law of Ukraine "On Taxation of Profits of Enterprises". The Association managed to ensure sane conditions in the creation by banks in terms of reserves for the coverage of risks, and improving other laws and regulatory acts.

It is necessary to mention that the sound activity of commercial banks, to a considerable extent, depends on the quality of preparation of the NBU's decisions, and substantiation of these decisions. Therefore, much importance is attached to the collaboration between AUB and NBU as regards the creation of the sane legal background for banking activity. At AUB's request the National Bank issued directions, pursuant to which the regulatory acts of the NBU must be submitted to the National Bank Board after their treatment with the participation of banks and the Association of Ukrainian Banks. For the preparation of several the most essential draft documents, working groups with the participation of specialists from AUB were created with the NBU. Such procedure was applied, e.g., when polishing up fundamental documents that regulate the activity of commercial banks such as Instruction «On the Procedure for Regulation and Analysis of the Activity of Commercial Banks», the Provisions «On Mandatory Reserves in the Banking System», and other documents.

Now the Association takes direct part in the important work dealing with the transition of the banking system of Ukraine to the system of international accounting standards and reporting.

One direction of the AUB's activity is establishing and maintaining business-like relations with the President of Ukraine, the leadership of the permanent Committees of the Verkhovna Rada of Ukraine, Prime Minister, and other officials from government authorities.

The Association coordinates its work with other unions and professional participants of the market.

For Ukraine to have a well prepared banking system capable of attacking new challenges dealing with restructuring of the economy, the economic policy should:

- accelerate the growth of the economic potential of banks, by allowing accumulation of their own capital and release of their balances from the bad debts of state-owned enterprises;

- defend banks from the interference of the state agencies that does not meet the requirements of existing banking laws, create the reliable system of insurance of banking deposits, and contribute to the formation of high confidence in banks by legal and physical persons;

- create an effective legislative and regulatory basis for the activity of banks which would ensure a positive protection against risks and achievement of a high degree of stability in operations.

Without banks that are economically powerful, that can operate in a stable manner, are aware of their mission in the market-oriented economy, and that have credibility in society - without such banks market-oriented reform in Ukraine will not be able to provide those beneficial impacts which are awaited by the public.

Дата добавления: 2014-12-29