Investment Opportunities into the Banking Sector

Since the beginning of the financial crisis, the Ukrainian government has invested about UAH 26 billion into JSC Rodovid Bank, JSCB Kiev and JSB Ukrgasbank. Notwithstanding this support, these banks are far from stable inancial condition and almost inactive in the market. Therefore, it was no surprise when the government declared its intention to sell at least two out of these three banks instead of continuing the never-ending injections of money into them.

However, foreign investors currently show no interest in investing into the Ukrainian banking sector for many well known reasons. On the contrary, some foreign banks declare their intention to leave the Ukrainian market entirely or in some business segments.

Even from a cursory review of the adopted Act, it becomes obvious that its main purpose is only to determine general procedural guidance for the government and a potential investor with respect to sale and purchase of shares in a state bank. The Act does not propose any tax or other kind of preferences or benefits for investors. Consequently, I do not see any reason to believe that the Ukrainian banking sector will become an attractive one for foreign investors. The government will be able to sell the banks either for a very low purchase price or upon giving significant preferences for investors.

Author: Yevgen Porada
Source: The Ukrainian Journal of Business Law. – 2012. – May. – p. 8