Ukrainian banking sector`s external debt shrinks to $10.5 bln

The Ukrainian banking sector`s gross external debt in the first half of 2016 decreased by $2.3 billion to $10.5 billion, as stated in the first edition of ”Review of the Banking Sector” prepared by the National Bank of Ukraine (NBU).

The document was presented during a briefing at the NBU.

According to the NBU, the reduction of debt has resulted from the repayment of earlier borrowed loans, as well as the conversion of these loans into capital. Banks posted $6.8 billion in long-term liabilities and $3.7 billion in short-term ones at the end of the second quarter of 2016.

As UNIAN reported earlier, following the results of the diagnostic survey of top 20 banks conducted by the NBU in 2015, the largest banking institutions took measures to implement a recapitalization program worth UAH 108 billion in total as of September 1, 2016.

The banks can perform a capitalization program both through boosting their capital, as well as by reducing credit risks, including by enhancing collateral on risky loans and recovery of collateral on non-performing loans.

Further, the NBU reported that net growth of investment in the first half of the year amounted to $2 billion, with a large portion of the funds being channeled into the banking sector for capital replenishment needs upon the results of the stress testing.

The NBU estimates that the share of foreign capital in the Ukrainian banking system, excluding insolvent banks, increased by 15.1 percentage points in June 2016, to 54.7% of the total volume.

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