Almost 40% of NGPF assets at risk due to poor situation in banking sector - UAIB
Almost 40% of the assets of Non-Government Pension Funds (NGPFs) and 20% of the assets of public collective investment institutions (CIIs) are in the risk zone due to the unstable situation in the Ukrainian banking system, Director General of the Ukrainian Association of Investment Business (UAIB) Andriy Rybalchenko has said.
"Today, taking into account the situation on the market and requirements of Ukrainian law, up to 40% of the assets of NGPFs are in bank deposit accounts – around UAH 300 million… These are assets in the risk zone. As for public CIIs, there is a requirement on the placement of a part of assets in deposit accounts. Taking into consideration the fact that our public system amounts to nearly UAH 11 billion today, up to 20% of these funds are in the banking system or in the risk zone," Rybalchenko said at a press conference in Kyiv.
He said that the situation worsened when in early 2015 NGPF assets were moved from tier one to tier seven in the deposit refunding order.
"What is tier seven; this actually means that nothing is paid to anyone. Now our sector has a large problem with the return of the money which entered the banking system – under Ukrainian law they are to move only via the banking system. Open-ended public funds are in the same situation," Rybalchenko said.
"The Deposit Guarantee Fund jointly with the National Bank of Ukraine lobbied for the removal of NGPF deposits from the law [on the individuals' deposit guarantee system]. Today, apart from the ending stock in the depositor’s accounts where kopecks are usually held, no deposit of pension funds in the banking system is secured. It is the same as any other deposit of any company," UAIB Board Chairman Dmytro Leonov said.
He said that as of early 2015, the total assets of CIIs and NGPFs held in banks undergoing liquidation were UAH 438.15 million, including UAH 11.7 million of NGPF assets. The largest debtors are Brokbusinessbank where UAH 353.43 million is frozen, Bank Cambio with UAH 51.9 million, and BG Bank (all based in Kyiv) and Bank Axioma (Dnipropetrovsk) with slightly over UAH 10 million.
"In reality, everything has died there. We cannot speak in legal language that the troubled bank would never return anything to anyone, and the assets cannot be written off. You see how the things are… Delta Bank is not taken into account here," Leonov said.
Leonov said that Ukrainian authorities should respect citizens and the businesspeople that invested funds in the country and did not transfer funds abroad.
"The non-banking financial sector could stop operating," Rybalchenko added.