The division of bank assets into bad bank and good bank, which proved successful during the period of overcoming the consequences of the East Asian financial crisis, should be applied in Ukraine after the end of the war, believes the Former Finance Minister of Bulgaria Simeon Djankov, who also has significant professional experience at the World Bank and the EBRD.
“I think this option is also the best for Ukraine. In some regions and cities of Ukraine, it is worth allocating non-performing assets to a bad bank and all working assets to a good bank. But it is in the same banks that worked during the crisis, “said the expert, who obtained the right to vote in the majority stake of Alfa-Bank Ukraine in mid-April, in an interview with Interfax -Ukraine.
At the same time, he clarified that this should not be done now, but in a year or two after the end of the war.
“In Korea, where there was no war, it happened after two years, in Thailand – after 2-2.5 years. Just when it became clear that the economy was starting to develop, it was worth doing,” the expert explained.
According to him, this approach was one of the reasons why growth in East Asia after the crisis reached 7-8% per year, and then a similar approach worked in Turkey in 2001-2002, where, after high inflation and a great financial crisis, they were able to do it in a year and a half.
“I hope that Ukraine can also follow this path, when private banks provided loans and other assets that did not work out. And it turned out that the bank has both good and a bad bank. And it is our task, It is not the task of the government to work with such assets. I think that all Ukrainian banks with large portfolios of companies and individuals will need them, “said Djankov said.
He added that such an approach would allow a very rapid recovery in lending to individuals and corporations, which would be necessary for economic growth to be 7-8% in one year.
“If some banks do not meet the capitalization conditions, then it is called differently,” said the ex-minister.
According to the expert, increasing the share of public banks and nationalization is a bad idea.
“During war, especially when funds are needed for other important things: war, reconstruction. Even in peacetime, I don’t think state banks are the best idea. International experience, by the way, proves it,” he said.