In recent months banking sector has been the major global newsmaker. Ukraine in this regard was no exception. However, among the information released only part is objective. This is exactly why reliable information from competent sources becomes highly important. Interview with Mr. Vadim V. Morokhovskiy, Chairman of the Board of Pivdennyi Bank, is the case when the words are backed up with real facts and all findings are based on years of experience and professionalism. For the purposes of discussion we divided the interview with Mr. Morokhovskiy into two parts – one part is devoted to the general issues of national economy, second – to Pivdennyi Bank which in our difficult times continues to maintain stability and reliability.



About situation in the economy

- Around the Ukrainian banking sector the flame of passion is now being fed: every now and then in the media appears a very different information which is often negative. This sparks rumors, talks and speculations. And how do you assess current situation in the financial sector of Ukraine?

– Indeed, many countries in the world face deep economic crisis of both banking system and economy in general. However, the banking system of Ukraine did not suffer as much as the financial systems of other countries. You can see that many large global banks went bankrupt or were liquidated. And today in Ukraine there are 9 temporary administrations but no new bankruptcy or bank liquidation. Still, domestic banks have many problems today. And those problems, unfortunately, grow day by day. In times of crisis, as it always happens in hard times, it becomes obvious who has built its policy properly and who's done it recklessly or improvidently. Today Pivdennyi Bank is reliable as always, accurate in calculations and, judging by objective indicators, the bank's team navigate its ship in the right course.


- What can save the Ukrainian economy?

– I believe there will be no default of Ukraine no matter how much would be said about it from TV screens. Some people want to rock the boat, to cause panic among the public. Therefore, to rescue the national economy it is necessary that politicians should finally calm down. They should stop much talking and start doing something. The state is obliged to protect its people and provide jobs for them thereby guaranteeing decent living conditions. There is Obama's Plan, Putin's Plan. And in our country there should be some state development plan and crisis bailout plan. Yes – there is the crisis, yes – it is deep and hard, but something should be done about it! In the first place it is vital to protect the country's banking system and depositors from irresponsible statements made by some political forces that undermine the situation and create huge problems. This certainly needs to be done by law enforcement authorities, the NBU, and by the bankers themselves. As for the depositors, they should realize that succumbing to provocations they contribute to the rocking of the country's banking system.

As for the banks, they should work in this situation not only for themselves, but also for the budget, for the state, for the customers they serve. Everyone should tighten the belts and understand that in order to survive now we need to work hard. We shouldn't forget that several years ago a solid foundation was laid in the national economy. A good start was given to independent Ukraine and we should put it to a good use and work honestly. Then everything will be alright.


- What should be the position of the National Bank in this situation?

– The NBU now took up the right position. We are particularly pleased with its decision on holding currency auctions for the purpose of minimizing losses of individuals with loans in foreign currency. We recommend all borrowers who faced this problem to use such auctions. Besides, we think that the issue regarding fifty percent of compulsory foreign currency proceeds sale should be settled. Today this will allow stabilize the rate and speed up positive market dynamics.


- How, in your opinion, refinancing of the Ukrainian banks should be carried out?

– First of all, refinancing should be reasonable. Money should be lent to those who would be able to pay it back – the one who can live should be saved. The NBU has all economic data on each bank. A good bank has nothing to hide and the National Bank knows perfectly well the real state of things in every bank. For this reason, the one who has the future should be saved first.


- Where do you think a sharp fall in UAH which we all have witnessed for the last months is coming from?

– Today all currencies fall against the dollar. Another thing is that hryvnia has fallen too quickly. This was largely due to the fact that people did not believe in reliability of the monetary system and in the first place authorities did not believe in it which is unacceptable in this situation.

In the meantime, it should be noted that first time for the last few years in February this year in Ukraine exports exceeded imports: this means that more dollars come to the country than leave it. This is a positive momentum for strengthening hryvnia. But again, panic moods that were tried to be imposed on us, adversely affect the rate of hryvnia. I think that currency auctions and introduction of 50 percent foreign currency proceeds sale should balance this issue.

In addition, it is very important that foreign partners who today are afraid of Ukraine understood that you can't only withdraw money from the country. Unfortunately, a large part of foreign investors does not take Ukraine for a full business partner.


- What will the crisis teach us?

– For the society to move forward, unfortunately, it needs a shake up. First it was wars which were followed by economic and scientific progress. And today something has to push the world forward to create new, more efficient economic systems. And such impetus will be, undoubtedly, the crisis – it is much stronger than all the economic crises the modern world has seen before, so it should not need to be underestimated. In five years time we will find ourselves in a completely different world which will be a much better place. Everyone knows that in hard times the society always recovers from everything superfluous.

The current crisis will teach a lot of people to behave, to come down to earth. In recent years some people have flown high thinking that they could live in a great way while making no effort. Today they will live the way they deserve it. To some extent the crisis has brought the society down to earth, forcing it to reconsider many things and to mobilize all resources in order to survive.


About positions of Pivdennyi Bank


- What is the performance the Bank will meet spring with?

– Major result is that in crisis times we have managed to maintain stability: we continue to provide high quality service to our customers, perform all our obligations. And with such results, I am sure, we will meet summer and winter and again spring, and again summer. It has always been like this and it will be in the future. We are also pleased that the International rating agencies Fitch Ratings and Moody's positively rated our performance and kept our rating at the same level. Among positive indicators we can name that since the start of the year we have acquired many new clients: corporates and individuals. What frustrates is that crisis in Ukraine is still in progress and it will continue to complicate the lives of our citizens for quite a long time. It is a very serious challenge which we have to meet with honor and Pivdennyi Bank is ready to take it.


- Has the Bank's policy changed in line with the global financial crisis?

– Principal position of the Bank has always been based on the fact that we have to build partnership relations with our customers. This position will not change and we will follow it during crisis and afterwards.


- How do you manage to maintain regular payments?

– Having a quality loan portfolio, we receive regular loan repayments and payments of interest. Therefore, we continuously receive the funds allowing us to maintain regular payments today and in the future.

Besides, today we have no problems with loan repayments and keep the quality of our loan portfolio; industries we work with provide the Bank with great inflows of "hard cash". Therefore, we have daily cash inflows that maintain the Bank's liquidity system.


- There is an old wise saying: "Do not put the eggs in one basket" Do you follow this principle while forming the Bank's policy?

– In principal, we have always specialized in serving several industries. And this is our method of diversification. As for lending, we believe that diversification does not mean to provide some loans to securities transactions, some to forward transactions, and some to retail lending. We have always proceeded from a real borrower, evaluated his financial solvency – and herein is our main diversification. We have always provided loans to "real business", "real customer" and not to one-day ventures. Today, when speculations outlived themselves, the banks having dealt with them, have serious problems. We have provided loans to real industry sectors and despite the fact that real businesses today have difficulties they stay real and work therefore.


- How has the client base structure changed and what are the reasons for that?

– The client base of our Bank continues to grow. As for the changes, recently we've started to service 25 thousand people. They are inhabitants of Odessa, working in public sector who will receive their salary through our Bank. We haven't done that before but today when there's a need to maintain stability of the banking system we will take on this burden on repayment and service of such a big number of state employees.


- What opportunities does the crisis open for the Ukrainian banking system in general and for Pivdennyi in particular?

– Crisis is a very difficult thing, very hard, tough but on the other side, human life can't exist without a crisis. Global financial crisis was inevitable. In this troubled time the main task of the bank is to perform its obligations. Unfortunately, crisis in our country has taken intricate, political forms. Banks are less trusted. In this situation we are particularly pleased that our clients' trust remains as high as before. People trust us, place deposits, and renew old agreements. We appreciate that. We will not disappoint their plans and hopes. We will not let them down.


- What would be your advice to our readers?

– First of all, I would like to wish wisdom, because people need to be wise and continue working, maybe even more than before.

Today is the time when all decisions have to be taken carefully, time to follow reporting and ratings but the most important is to stay unprovoked. Unfortunately, or fortunately, everyone today can say everything he wants and bear no responsibility. This is a very big problem for our country that creates unnecessary shaking for the entire financial system.

Therefore, only personal wisdom of every individual rather than collective unconscious behavior can make a difference.