Ukraine Central Bank Promises Liquidity To Local Banks, With One Condition

Tyler Durden's picture

While the "developed" world scrambles to find a way to provide Ukraine with a bailout in such a way that Russia doesn't turn off the gas, Ukraine is doing some scrambling of its own to assure the local banks, which have been plagued by both bank runs and a collapse in the currency to record lows over the past few days, that it will be there to provide funding on a business as usual basis. Itar-Tass reports that "Ukrainian banks will be provided with necessary liquid assets, including cash." But there is a condition: the funding will only come "if they will remain under open control of the National Bank of Ukraine, the newly-appointed NBU Chairman Stepan Kubiv is quoted as saying on the bank’s official website."

From Itar-Tass:

“Financial and payment systems, which are of vital importance, operate normally, as well as the open market operations do. The situation is under control. We are getting feedback from all of the country’s banks, regardless their size”, he said.

 

Kuvib stressed that the National Bank’s gold reserve includes high-liquidity assets. He mentioned such priorities of the Ukrainian banking system as the protection of clients’ interests, as well as the resumption of negotiations with external creditors, the International Monetary Fund in the first place, right after the country’s new government is formed and elaboration of a strict new plan for economic and financial reforms.

 

“We are very determined regarding the measures, which will be applied to those who break the mandatory requirements and are involved currency speculations. I am certain the National Bank's measures will calm the markets and the people and ease devaluation fears”, the bank’s chief said.

In other words, any and all banks that want to continue operating must pledge allegiance to the brand new central bank governor Kubiv, who previously did not work for Goldman Sachs, but instead was one of the commendants for the EuroMaidan demonstrations. That is not say he has no banking experience at all: previously he used to be head of Kredbank. Who is Kredbank? As it turns out, it is the bank with the largest Polish investment in banking institution in Ukraine. Kredobank national network contains central branch and 130 outlets throughout Ukraine. Today, European investment is 99.6% in the share capital of Kredobank, Ukrainian capital is 0.4%.

At least it is clear where the Ukrainian central banker's allegiances lie, and under whose "open control" suddenly the entire Ukrainian banking sector has fallen under. And just like that, Europe knows everything these is to know about all assets held within the Ukrainian banking system by the local population.