National Bank of Ukraine

Financial Sector Participants Express Concern over State of Cooperation with International Institutions – Systemic Risk Survey
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31 May 2019

Press Release

 

Banks and non-bank financial institutions describe the state of the financial sector as satisfactory, but are concerned about the state of cooperation with international financial institutions. This is evidenced by results from the latest Systemic Risk Survey conducted by the NBU.

 

Two thirds of the surveyed financial institutions described the state of the sector as satisfactory, and 21% said it was good.

 

Most respondents expected no changes in the state of the sector over the next six months. Some 64% of those surveyed said that the total current risk level was average, with 36% referring to it as high.

 

For three reports running, respondent have cited corruption and the performance of the law enforcement authorities and the judicial system as the main sources of risk: 57% of respondents said these factors were sources of high risk, while 29% referred to them as sources of very high risk.

 

Meanwhile, the largest percentage of respondents (32%) named political and social conditions in Ukraine and the state of cooperation with international financial institutions as sources of very high risk. The surveyed financial institutions also confirmed this in open questions, specifying that cooperation with the IMF was critical for safeguarding the sector’s stability.

 

The top five sources of risk included:

 

     corruption and the performance of the law enforcement authorities and the judicial system

     political and social conditions in Ukraine

     the state of cooperation with international financial institutions

     the level of protection of creditor and investor rights

     fraud and cyber threats.

 

Compared to the previous survey conducted in November 2018, the largest increases were reported for risks arising from political and social conditions in Ukraine, and changes in the inflow of foreign capital (direct investment) into Ukraine. The risk arising from competition on the financial services market was reported to have decreased most of all.

 

The "Systemic Risk Survey is available in the Publications Section of the NBU’s official website at:

 

The next Systemic Risk Survey will be published in November 2019.

 

 

For reference

 

This survey was carried out from 13 May through 27 May 2019. Executives from 20 banks, four insurance companies, and four investment firms took part in this survey. Financial institutions against which sanctions have been imposed were not surveyed. Summary results were calculated by giving equal weight to each survey response, regardless of the size of the bank/company, or its market share.

 

The Systemic Risk Survey, which is conducted twice a year, aims to study how the largest banks and non-bank financial institutions perceive current and potential risks to the financial sector. This report shows how top managers of financial institutions assessed the state of the financial sector over the past six months, and what they expect for the following six months.

 

The results presented are based on the respondents’ opinions and do not necessarily reflect the NBU’s views on financial sector risks.

 

 


 

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