After war, Ukrainian banks should allocate bad assets to bad bank - ex-Minister of Finance of Bulgaria
The division of bank assets into bad bank and good bank, which proved itself well during the period of overcoming the consequences of the East Asian financial crisis, should be applied in Ukraine after the end of the war, considers ex-Minister of Finance of Bulgaria Simeon Djankov, who also has significant work experience at the World Bank and the EBRD.
"I think this option is also the best for Ukraine. In some regions and cities of Ukraine, it is worth allocating non-performing assets to a bad bank, and all working assets to a good bank. But this is within the same banks that worked during the crisis ", the expert, who was given the right to vote in the majority stake in Alfa-Bank Ukraine in mid-April, said in an interview with Interfax-Ukraine.
At the same time, he clarified that this should not be done now, but in a year or two after the end of the war.
"In Korea, where there was no war, it happened after two years, in Thailand - after 2-2.5 years. Just when it became clear that the economy was starting to develop, it was worth doing," the expert explained.
According to him, this approach was one of the reasons why growth in East Asia after the crisis reached 7-8% per year, and then a similar approach worked in Turkey in 2001-2002, where, after high inflation and a big financial crisis, they were able to do it in a year and a half.
"I hope that Ukraine will also be able to follow this path, when private banks provided loans and other assets that did not work. And it turned out that the bank has both a good bank and a bad bank. And this is our task, not the task of the government to work with such assets. I think all banks in Ukraine with large portfolios of both corporate clients and individuals will need it," Djankov said.
He added that such an approach would allow for a very quick resumption of lending to both individuals and legal entities, which would be required for economic growth to be 7-8% in a year.
"If some banks do not fulfill the requirements for capitalization, then it is called differently," the ex-minister said.
According to the expert, increasing the share of state-owned banks and nationalization is a bad idea.
"During the war, especially when funds are needed for other important things: war, reconstruction. Even in peacetime, I don't think that state banks are the best idea. International experience, by the way, proves this," he said.