KIEV: Ukraine is shutting down two banks owned by tycoons close to its ousted president and a smaller lender which has also been hit by the country's economic and political upheaval, a senior banking official said on Wednesday.
Brokbusinessbank, Ukraine's 16th biggest by assets, and Forum Bank, the 24th largest, are the most prominent business casualties of a recession aggravated by a separatist rebellion in east Ukraine and Russia's annexation of Crimea.
Announcing the central bank's decision to close the three banks at a banking "round table" in Kiev, Andriy Olenchyk, Deputy Managing Director of the state Deposit Guarantee Fund, said other banks could also soon follow them out of business.
"The National Bank is stress-testing the banking system and by the end of the year a decision could be taken (on closing) a sizeable group of banks," he said.
"Brokbusinessbank is liquidated as of today. The liquidation of Mercury Bank will start tomorrow, not today. The decision has already been taken and unfortunately Forum Bank also faces liquidation."
The banks' closure underlines the difficulties facing the business community in Ukraine as the economy's slide continues and violence seethes in the east, where armed separatists are calling for some regions to be annexed by Russia.
The economy declined by 1.1 percent in the first quarter compared with a year earlier and the government says it could fall by three to five percent after zero growth in 2013.
The problems persist despite a $17 billion bailout from the International Monetary Fund, partly needed to help Ukraine meet large debt payments.
Work has stopped at many factories, mills and coal mines in eastern regions which have been hit by violence and contribute about 16 percent to Ukraine's economy. A Reuters poll forecast an up to six percent fall in industrial production this year.
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