STATE-OWNED BANKS: RISK ASSESSMENT OF THE HIGH SHARE OF THEIR CAPITAL IN THE BANKING SECTOR AND THE WAYS OF MINIMIZING THEM

Abstract

In Europe, state-owned banks are not always key players in thefinancial sector. In Ukraine, they play systemic role. A high share of state capital in the Ukrainian banking sector is a consequence of crises. Today,state-owned banks, notably Oschadbank and Ukreximbank, have a number of fundamental problems, including unsatisfactory asset quality, low interest margins and operational efficiency.The article is devoted to the analysis of the basic indicators of stateowned banks development in Ukraine. Approaches to the interpretation ofthe concept of a «state-owned bank» are determined. Changes in the total number of banks and state-owned banks are analyzed, as well as the assets of state-owned banks in the total volume of assets of the banking system for 2015–2019. The volume of capitalization of Oshchadbank, Ukreximbank, PrivatBank, and Ukrgasbank has been analyzed. The dynamics of obligations and the own capital of state-owned banks have been considered. The results of the financial activities of domestic state-owned banks are compared. The key problems of state-owned banks in modern conditions are identified.There are the directions proposed for improving the financial stability ofstate-owned banks, namely:- to subordinate the work of the bank to one key goal – to maximize thevalue of the bank for the owner, i.e. the state. There should be focus onincreasing profitability and return on capital rather than on maintaining an increasing market share;- to quickly clear the balance of non-performing loans, most of whichare properly reserved;- to identify priority lending directions that will increase the interestmargin;- to strengthen credit analytics and expertise; implement appropriaterisk management systems;- optimize operating costs; re-evaluate budgets in terms of the returnon implemented and planned investment projects.