Kyiv, October 3 (Interfax-Ukraine) – The state should take active part in supporting the Ukrainian banking system in the crisis period, applying among other things the tools of additional capitalization of credit and financial institutions and attraction of international financial organizations to the structure of shareholders in banks, according to experts discussing the issue at a roundtable at Interfax-Ukraine on Wednesday.

"Not only the NBU, but also the government and president should play an active role… Banks are really on the verge of catastrophe," Deputy Director of Ukrlandfarming Ihor Petrashko said.

He said that in the conditions of the military conflict with Russia the banking sector of the country is facing an outflow of deposits and large devaluation expectations.

He said that if the stress tests of 15 largest banks showed that only 10 banks are to be additionally capitalized, after the stress test of another 20 large banks, there could appear that all banks of the group require additional capitalization.

Petrashko said that private banks with Ukrainian capital have the most difficult situation, as state banks could expect that the state will support them, while banks with foreign capital can be supported by foreign owners.

He said that in the conditions of low motivation for investing private capital to the banking sector it is appropriate for the state to stimulate the process of additional capitalization of banks, providing support of UAH 2-3 per each hryvnia invested by private investors.

He said that systemic banks shareholders of which will not be able to capitalize their financial institutions are to be partially nationalized and similar small banks – liquidated.

"If we take systemic banks, the issue should be clear. If after the stress tests the shareholders are not able to additionally capitalized the bank, the state should nationalize them, taking Ukrgasbank as an example," he said.

Petrashko proposed that the upper level of deposit rates should be restricted in the future at the level of 10%, all transactions should be transferred into hryvnias, the liabilities to banks are to be prolonged for 5-20 years and 10% guarantee should be introduced for deposits.

"Thus, an incentive mechanism to develop business will be created," he said.

In turn, it is proposed that to compensate the relevant losses to banks the restructuring of debt of banks to the National Bank of Ukraine on refinancing credits should be transferred using tools of subordinated debt or bonds of financial institutions.

SP Advisors Director General Nicholas Piazza proposed that experience of Georgia should be studied where banks created a general fund for protecting from sudden getaway of depositors at certain banks.

He said that it is appropriate to work on the attraction of international financial organizations to the structure of shareholders of Ukrainian banks to improve funding of financial institutions and cut rates for borrowers.

Assessing the work of new top managers of the central bank, Piazza said that the restrictions on payment of dividends in foreign currency introduced by the NBU was a mistake, as the decision aroused panic among investors without due explanation of the measure by the central bank.

Petrashko said that there is a large problem with the purpose of foreign currency.

"We have the exchange rate of UAH 12.95/$1 only in paper. We all understand that it is unrealistic to buy foreign currency at $12.95/$1. Maybe certain banks linked to the NBU could do this," he said.

"All regulative measures today are aimed at administrative jamming," he said.