The Ukrainian Finance Ministry has confirmed a report by the National Bank of Ukraine (NBU) about the worsening of the loan portfolio of Oschadbank, which was formed before 2014, and says that its additional capitalization might be required.

"The portfolio is continuing to worsen. Perhaps, this capitalization will be needed. We are now in discussions with Oschadbank and the National Bank," First Deputy Finance Minister Oksana Markarova said at a final press conference of the Finance Ministry in Kyiv on Tuesday.

According to her, since September a number of the bank's major debtors had ceased to service their loans, which the ministry did not expect.

With respect to Ukreximbank, Markarova said that the Finance Ministry had until recently had no information on the need for its additional capitalization and that the bank itself did not raise this issue.

She noted that Ukrgasbank had managed to achieve a significant reduction in the number of bad loans, so there is currently no need for its additional capitalization.

Markarova noted that the additional capitalization of state banks could be avoided if they accepted the idea proposed by the ministry on transferring the bad loans accumulated before 2014 to a centralized structure for working with them.

In general, she said that addressing the issue of distressed assets consists in increasing the protection of creditors' rights in the country, improving the work of the executive service.

"Without solving these problems, we will not be able to significantly improve the banking sector as a whole, and state-owned banks in particular," she said.

Deputy NBU Head Kateryna Rozhkova said earlier that due to the deterioration in the quality of loan portfolios, the possibility of additional capitalization of state-controlled Oschadbank and Ukreximbank (both based in Kyiv) was being studied.