Ukraine must prepare capital market to attract investments for post-war recovery – Rozhkova
Ukraine must now prepare the capital market infrastructure to attract private and international investments for post-war recovery, believes First Deputy Governor of the NBU Kateryna Rozhkova.
"We will not build a second London Stock Exchange, but our capital market must be comparable to the size of the economy. It is important that Ukraine not only adopts a law, but also prepares the financial market infrastructure for post-war recovery," she said in an interview with the Interfax-Ukraine agency.
According to her, the creation of an effective capital market is a priority not only for the NBU, but also for international partners, in particular the European Commission.
"We hope for investments, both private and from our international partners. It is important that the market is ready for this," the banker added.
Rozhkova noted that currently the domestic market is dominated by domestic government bonds, which is natural in wartime conditions. At the same time, she noted, even now successful examples of alternative instruments are emerging - in particular, bonds of Nova Poshta and NovaPay. In her opinion, municipal bonds are also a promising direction.
"For companies and municipalities, raising funds on the stock market is a good alternative source of replenishment of working capital and financing of investments in development. This is cheaper than bank lending, obviously. But the necessary tools and procedures have not yet been developed," she stated.
Rozhkova also mentioned the successful experience of integrating the depository of the National Bank of Ukraine with the international depository ClearStream in 2019 through the creation of an appropriate "link", which allowed to increase the share of non-residents in the government bonds market to 16% before the war and take a step towards the openness of the Ukrainian financial system.
"Now we want to expand this "link" to municipal and corporate bonds. But this requires changes in procedures and new solutions in the regulatory infrastructure," she explained.
In her opinion, the current volume of bank capital limits the ability to finance large-scale projects, since the banking sector of Ukraine is ten times smaller than in Poland. One of the solutions may be consortium loans and attracting financing directly through parent Western banks.