This page has been robot translated, sorry for typos if any. Original content here.

"Secret list of the regulator": the worst banks by the NBU version. DOCUMENT

наихудшие банки по версии НБУ. ДОКУМЕНТ

For many years, the NBU has been using the top-secret "Early Response System" (hereinafter referred to as the SRP or the System) to evaluate the activities of its clients. This is a set of economic performance indicators of banks that are not published anywhere and are calculated by the regulator for internal use.

This is written in an article for RBC-Ukraine Alexei Komaha reports.

Calculations are conducted for all financial institutions at least twice a month to identify hidden problems. If the bank violates the norms of the "System", then the NBU officials start reacting: they can call the management of the unfavorable or potentially dysfunctional bank "on the carpet", send a check or give the bank an instruction to correct deviations, etc.

But not always. If the "client" has a serious political roof or "letters of recommendation from Prince Khovansky", then he can be politely asked to be more careful when drafting the reports.

It is noteworthy that the SRP is not regulated at the legislative level and is the know-how of the officials themselves. Over the past ten years, "System" several times changed radically. Some indicators were added, others were removed.

In total, these indicators are several dozen. The exact list of standards and algorithms for their calculation are unknown even to bankers. In the depths of NBU supervision, the secrecy of the methodology is explained by the desire to avoid sketching when drawing up reports of wards.

At the same time, the CPR indicators, in fact, are analogous to the mandatory economic standards that banks must calculate and comply with in accordance with the Instruction on the procedure for regulating the activities of banks in Ukraine (approved by NBU Resolution No. 368 of August 28, 2001).

Unlike official regulations, which are partially published by banks, the calculation algorithms in the SRP are much more rigid and reflect the state of affairs in the financial institution much more objectively. That is why the NBU keeps the calculated results in secret.

By and large, the official standards "for publication" have long been turned into a fiction. In general, the system looks just fine.

Although in fact most banks either "draw" these indicators or violate them openly. This is recognized by the officials themselves.

For example, the first deputy chairman of NBU Alexander Pisaruk recently complained about the imperfection of the "accounting" discipline of banks, which according to him "lowers the effectiveness of the NBU early warning system and the regulator's performance of supervisory functions in general."

As a result, the NBU even introduced a moratorium on the punishment of banks for violating mandatory economic standards, if it is related to the devaluation of the hryvnia or the losses of banks in the Crimea and the Donbas. If the war and annexation hit heavily mainly on the financial condition of large banks, then the entire banking system suffered from the devaluation. Therefore, the de facto lack of mandatory standards extends to virtually all financial institutions.

Another thing is the CPP. According to knowledgeable bankers, NBU's banking supervision now pays more attention to analyzing the reporting of the secret Sistema.

The main parameters that are assessed in the SRP are capital adequacy, liquidity, the level of problem and insider loans, the existence of gaps in the timing of borrowing and asset allocation (so-called GEPs), return on assets and other key indicators. But at the same time the regulator gives the most objective estimates of these lighthouses.

The greatest importance of the NBU gives two indicators of capital adequacy and the share of negatively classified assets (NFA). According to the CPR, the worst combination of these two indicators is observed in the following banks.

наихудшие банки по версии НБУ. ДОКУМЕНТ

Almost all banks violate one or two standards of the CPR, sometimes even without realizing it. But there are also record-holders that do not correspond to the NBU's ideas about an ideal bank at once on 7-8 parameters:

наихудшие банки по версии НБУ. ДОКУМЕНТ

As can be seen from the table, many violators work with deviations from May to October last year at least. Although some live with this years. Most likely, the picture has not changed at this time.

The champions for non-compliance with the CPR indicators are VTB Bank and Kyiv Bank with 8 violations each.

VTB, controlled by the Russian state, last year became one of the leaders in the outflow of deposits. In addition, the quality of the loan portfolio of the bank noticeably spoiled the war in the Donbass and the annexation of the Crimea, as well as the massive departure from the homeland of many prominent regions who liked to be lent to this financial institution and now are unlikely to pay their debts.

As a result, the return on assets (E1 ratio) of VTB, according to the RAF as of October 1, 2014, was 67.7%, which is 3.5 times worse than the limit set by supervision.

At the moment the bank needs considerable capitalization, the prospects of which are rather vague in connection with the introduction of EU and US sanctions against the parent VTB. Source:

The most shocking picture is observed in the bank "Kiev", which is 99% owned by the state in the person of the Ministry of Finance. It has the lowest capital adequacy ratio (K1) in the system according to the PRS (-) 33.35%. Liquidity of the bank is zero, and the share of negatively classified (idle) assets exceeds 96%. In fact, it is no longer a bank, but a "black hole". This, if I may say so, the institution has not paid deposits for many months and does not pay at all.

Recently, Finance Minister Natalya Yaresko promised to deal with the problems in this bank. But it is unlikely she will succeed.

Money in the "Kiev" evaporated for the second time.

The first - even in times of crisis 2008-2009. After recapitalization in 2009, the institution could not cope with the problems, and the state's contribution to the statute of this bank more than 3 billion UAH disappeared in an unknown direction. Source:

The second "honorable" place in terms of the number of deviations in the "black list" of the RW was shared by Nadra Bank and Cambio Bank, which scored seven points each.

"Cambio" has already been declared insolvent and withdrawn from the market.

"Nadra Bank", which belongs to Dmitry Firtash, has been leading the anti-rating of the SRP for more than half a year and often does not spend client payments for months. The bank's assets are almost 36 billion UAH (11th place). It is problematic to withdraw it from the market, it is too expensive to nationalize.

Given the closeness of Firtash to the President, it is unlikely to do both without the consent of the owner or the "portrait" himself. Most likely, the NBU will continue to pretend that it does not notice problems in Firtash's bank, while investors do not start storming the regulator's office.

It is noteworthy that the bank "Clearing House" (five violations), which also enters into the orbit of influence of Dmitry Firtash and his business partner MP Ivan Fursin, appeared in the anti-rating.

Strange as it may seem, but in the "black list" of NBU supervision there were institutions with European roots Austrian Raiffeisen Bank Aval (RBA) and Italian "PravexBank" (six violations). Unlike their Ukrainian counterparts in misfortune, these banks are much more carefully execute client payments. The hit in anti-rating, most likely, is explained by the absence of obvious falsifications in the reporting.

Although the general condition of these financial institutions is also difficult to call brilliant. So, for example, in the RBA, according to the data of the SRF, the capital adequacy (K1) is only 3.8% with a norm of at least 10%.

And at "Praveks" the indicator of profitability of assets (Е1) according to the version of the CPR is more like a car number with a minus (-) of 2511.18%.

Among the leaders in the number of violations of the CPR indicators for many years there is another institution with the Italian capital "Ukrsotsbank". It is interesting that Ukrsotsbank in the first half of last year, even in official accounts, found violations of the NBU standards.

The bank did not fit right into two mandatory (public) standards: the ratio of regulatory capital to assets and the maximum amount of credit risk per counterparty. Nevertheless, by the end of the third quarter of the accountant chtoto corrected in the reporting - and the bank was in a jade.

That's only according to the version of supervision, not everything is so rosy. According to the calculations of officials, "Ukrsotsbank" actually has a negative equity. The capital adequacy ratio (K1) according to the PRS data in this bank (-) is 2.67%. At the same time, Italian shareholders publicly refuse to capitalize on their Ukrainian daughter, referring to the lack of reforms in Ukraine and plan to get rid of the unprofitable asset.

Among the top15 "bad" banks are also "Dnipro Credit" Victor Pinchuk, "Finance and Credit" Konstantin Zhevago and Delta Bank Nikolay Laguna.

Interestingly, at least four figurants of the NBU's "black list" - Nadra Bank, Delta Bank, Kyiv Bank and the Ukrainian Bank for Reconstruction and Development (like Kyiv, it belongs to the Ministry of Finance) - are already recognized as problematic (not confused with insolvent). The fate of these financial institutions is still under big question.

Most likely, "Kiev" and the UBRD will be sent for liquidation. What to do with "Delta" and "Nadram", it seems that neither their owners nor the National Bank know.

The main "Sistema" offenders and NBU chairman Valery Gontarev did not answer the written questions of the editorial board.