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The present and the future of the Ukrainian financial system

The present and the future of the Ukrainian financial system. Hrant Bagratyan Budapest 2013. Contents. General over v iew S tructure of the Ukrainian financial system Ukrainian commercial banks Insurance market and non state pension funds .

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The present and the future of the Ukrainian financial system

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  1. The present and the future of the Ukrainian financial system HrantBagratyan Budapest 2013

  2. Contents • Generaloverview • StructureoftheUkrainianfinancialsystem • Ukrainiancommercialbanks • Insurance market and non state pension funds

  3. 1.1. GeneraloverviewTop 20 economies by GDP 2010 and Ukraine, bln of current USD 3 http://data.worldbank.org/indicator/NY.GDP.MKTP.CD

  4. 1.2.Disproportional developments among the subjects of the worlds economy.Top 20 economies by per capita GDP, Poland, Russia, Ukraine http://data.worldbank.org/indicator/NY.GDP.PCAP.CD 4

  5. 1.3 The essence of economic growth: cumulative economic growth In 1990-1999 Ukraine’s GDP decreased 8.8% a year. As a result by 1999 the country’s GDP was only 40.8% of 1990’s level. In 2000-2007 GDP increased 7.1% per year. As a result GDP increased up to 72.5% of 1990’s level. In 2008-2012 the country’s GDP decreased up to 69.1% of 1990’s level. http://data.worldbank.org/topic/economic-pol icy-and-external-debt; www.ukrstat.gov.ua

  6. 1.4 But … The country shows very good performance in high-tech (by example, one of the best figures on cellular phones; Ukraine’s cultivated arable land in 2009 was 270.000 he, while Russia only 3000) It’s educated better than world average High number of internet users The best figure in the world in mobile subscribers 6

  7. 2.1. ThestructureoftheUkrainianfinancialsystem (2011), assets, in % to GDP(http://www.bank.gov.ua/doccatalog/document?id=121942; http://www.dfp.gov.ua/734.html)

  8. 2.2. Synopsis • Thebankingsystempracticallyabsorbingallsavings • Labor productivity in banking sector less than in Europe but equal to Russia • NPF aren’tdevelopedandstatepensionfund (193 bln UAH = 50% oftheconsolidatedbudgetexpenses) isapermanentthreatforthecountry’spublicfinances • Thereisa shortageofinstrumentstocreatelong-terminvestmentmoney, mutualfundsandotherinvestmentinstitutions – unabletoprovidethem

  9. 2.3. Assets and liabilities of Ukrainian banks, bln UAH, www.bank.gov.ua; http://www.ukrstat.gov.ua/

  10. 2.4. InflationandSpreadbetweendepositsandloans, http://www.bank.gov.ua/doccatalog/document?id=260214; «Бюлетень Національного Банку України»

  11. 2.5. Reservetocoverpossiblelossesoncreditoperations,% ofallreservesunderactiveoperationsofbanks

  12. 2.6. Geographical controversies of liabilities and assets of banking system, 2010

  13. 2.7. Distribution of deposits and loans between households and NFC’s in 2005-2011, UAH million, http://www.bank.gov.ua/Publication/econom/Buleten/2010/bull_12-10.pdf.

  14. 2.8. Figures of financial stability of European banking systems, %

  15. 2.9. Dynamics of creditrisksofUkrainianbanksin 2002-2010, bad loans in the portfolios of banks in Ukraine

  16. 2.10. Synopsis Ukraine's loan portfolio of banks only 60.3% is formed from its own resources (deposits, interbank loans within the country). Theexternaldebtofthebanksand NFC in 2012 was 56,3% of GDP. TheinflationdecreasesbuttheInterestpaidtothedepositsincreasesandtheinterestpaidforloansgettingupto 29%. Thespreadbetweendepositsandloansin 2012 reducedshowingcertainpositivedynamics Further increase on reserves and capital requirements essentially decrease the capacity of the economy to finance the growth Poor regions are financing relatively rich (central) regions, the concentration grade of the economy permanently increases Big companies permanently increase their specific weight in the Ukrainian financial market

  17. 3.1. Insurance market development, http://www.iii.org/;http://www.dfp.gov.ua

  18. 3.2. The insurance penetration level of the GDP of Ukraine. Isurance premiums to GDP, %, 2009

  19. 3.3 Consolidated structure of investment portfolio world’s top 5 pensions funds, 2006, http://www.watsonwyatt.com/europe/research/pdf/PI_300_Analysis_2007.pdf

  20. 3.4. Consolidated structure of investment portfolio of Ukrainian pension funds, end of 2010, %, http://www.kmu.gov.ua/control/en/publish/article?art_id=22835607&cat_id=73035

  21. 3.5. The structure of the investments of pension funds in the world and Ukraine: reverse influence making long money to short

  22. 3.6. Insurance – synopsis • Very low level of development • Unreasonably high specific weight of deposits in assets • Limited capacity to accumulate means • Dominations of state pension system • Limits on cash generation

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