Ukraine banks ask government for billions in assistance

Kiev, UkraineKiev  - Ukraine's already-unstable banking sector appeared even more shaky on Thursday with dozens of banks applying formally for government assistance.

A total of 25 loan institutions have filed requests for low- interest credits or other state financing, said Anatoly Shapovalov, a spokesman for the National Bank of Ukraine
(NBU), according to an Interfax news agency report.

The NBU announcement came one day after the Ukrainian government unveiled an unprecedented one-billion-dollar bail-out of Prominevestbank, the country's sixth-largest lender.

The NBU expects to issue "at least" 310 million dollars in additional financing to the growing group of needy banks, in order to maintain liquidity throughout the industry, Shapovalov said.

Ukrainian financial media estimated the value of loans soon to be issued by the NBU to the country's banking sector at as much as two billion dollars, including money already promised to Prominevestbank.

Account-holders at the beleagured Prominvestbank were unable to withdraw funds or otherwise conduct business on Thursday, as bank offices were closed.

Prominvestbank staff speaking on Channel 5 television said accounts would be "unfrozen" as soon as the government assistance package is paid in full to Prominvestbank, the Delo newspaper reported.

Prominvestbank management on Thursday requested an additional 390 million dollars in assistance, above and beyond the 1 billion dollars promised by the government on Wednesday, the Interfax news agency reported.

Kommersant-Ukraina newspaper identified the top-10 Narda bank as one of the 25 banks asking for government financing. Narda will receive a 290 million dollar bail-out package needed to cover 230 million dollars of external debt, according to the report.

The money fronted to Narda by the NBU will allow the bank "to resolve its cash flow problems, plus give us additional funds to deal with other issues," said Ihor Hilenko, Narda bank president.

Other top Ukrainian banks asking for help on Thursday were Rodovidbank, Alfa-Bank, Kreditprombank, and Finansi i Kredit bank, according to an Economicheskie Izvestia newspaper article.

The NBU already had approved 23 of 25 assistance package requests worth some 620 million dollars, according to the report. The banks needing cash inflows accounted for some 25 per cent Ukraine's banking sector, observers said. (dpa)

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