Foreign Funds Moving to Ukraine

KIEV, Ukraine -- Ukraine is becoming more and more attractive for foreign banks, which have demonstrated an enhanced interest in opening representative offices and branches. Naturally, this means the country can expect to see a large influx of financial resources.

The number of foreign financial structures in Ukraine is on the rise. Over the past month, several foreign banks have announced plans for opening a representative office or branch here. Local banking experts anticipate the new foreign banks will show interest in the acquisition of Ukrainian banks. There will also be talk about providing loan resources and in larger volumes than previously.

Moreover, it is not just the newest European banks that plan to “open shop” in Kyiv.
Indeed, the French BNP Paribas S.A., to which the National Bank of Ukraine gave permission to open a local branch last week, is the largest French bank with structural subdivisions in over 85 countries around the world. The total assets of the BNP Paribas group as of January 1, 2004 totaled 783 bn euro.

The German Commerzbank is one of the largest banks in Germany. Its president, Claus Peter Mueller, announced last week the bank’s desire to open a branch in Ukraine (N.B. a representative office of the bank has been operating in Kyiv for several years now). At present, this financial structure services over 20% of foreign economic relations between Ukraine and Germany.

Be that as it may, Ukraine’s parliamentarians have not yet passed the NBU bill permitting the opening of subsidiaries of foreign banks in the country. For this reason, it can be safely predicted that the Germans will only be able to carry out their plans by the end of 2005.

Meanwhile, Baltic banks also have plans of expanding their presence in Ukraine. Two Latvian banks announced their plans last week. Regionala Investiciju Banka (Regional Investment Bank) plans to open its first representative office in Kyiv, while Parex Banka will open a branch in Dnipropetrovsk. While RIB is considered in its native country to be a medium-sized bank, Parex Banka is considered one of the largest in Latvia.

It suffices to say that the latter has assets exceeding 1.5 bn euro and that it is represented in 10 countries around the world, including Great Britain, Germany, Sweden, Japan and Russia. The Latvian giant also has the affiliates AP Anlage und Privatbank in Switzerland and Parex Bankas in Lithuania.

Source: Kyiv Weekly