Ukrainian banks to recover soon?

Oxford Business Group undertook a study of a Ukrainian banking sector. Here are the conclusions:

Officials are hoping that banks will start opening the taps soon, and are planning to take some steps to encourage them to do so. On January 19, Valeriy Lytvytsky, the head of the group of advisors to the governor of the NBU, said it would be appropriate for the reserve to accelerate the adoption of a resolution intended to boost the credit activity of commercial banks.

Though details of how the NBU is to prompt banks to return to the loan market are lacking, predictions that the economy should move out of recession in the coming months and post modest growth by the end of 2010 may spark some interest amongst Ukraine’s banks to resume lending.

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While it will take time for Ukraine’s banks to regain the confidence to re-enter the loan market, the worst appears to be over for the sector, with some underperformers winnowed out and the remaining players potentially made stronger by the experience.