There will be bankruptcies in Ukraine. Should depositors be concerned about the reliability of the banking system?

About banks, more precisely about the banking system. Side notes.

1. system as a whole. sustainable. It’s liquid, so there’s money. It is generally capitalized, meaning it may work in the future. Operationally profitable. It withstands even sharp and significant shocks, meaning it will work even if a nuclear explosion occurs.
2. Is it stable? NO. What does unstable mean? What we see is the fact that his current state is temporary. one time. This cannot and will not continue for long. It won’t take that long when more than 40% of the assets in the system are government securities (government bonds + GDS + a few more) and more than half of the interest income is government bonds + GDBS. The banking system cannot and will not be so dependent on the state for a long time.
3. Where and how it will change is a big question. This can be a soft landing (not lending) where the NBU will gradually lower the rate and encourage banks to adjust their balance sheet structure with the right adjustments, or a rather hard landing where the NBU will cut the rate in drastic steps. leave the banks as they are (on the principle of “they should have thought of it themselves”).
4. The concentration of large banks is increasing and will continue to rise. It became 73%, 79% entered the top 10. Moreover, these are all market things, not about mass bankruptcies, banks play at scale, bigger is easier. Especially considering that there are 4 states.
5. The “tail dump” as it once called a group of banks at the end of the list, without any business model or de facto bank, but something else, the license is there, it’s a legacy and regulatory oversight is expanding. In this way, however, they climbed recently and counted almost two dozen people who did not know what to do or would not know what to do. So there will be bankruptcies. There is no risk to the system as a whole.
6. The risk—that is, the challenge—is only in how to get workers and big banks back to “normal banking life”. How to do that is another big issue, and then as they say, everything is probabilistic, so it might be, but it might be.
7. Stress tests (with checking the quality of assets) would be completely painless for the system. Stock should be sufficient. Some public banks will have problems, it’s an open secret. As one wise person has formulated (what was on my mind, but I did not formulate it in words): there will be a gap in the capital of such state banks; they will cover the dividends of such a state bank, that’s all. And in general, this year’s stress tests are about stress tests, not AQR, something very necessary, necessary. But not to mention the actions of the regulator, no conclusion and plan should be based on stress tests. Why – See item 2: the structure of banks’ balance sheets and incomes is temporary and the stress test is based on a static equilibrium, that is, on the fact that the situation there will last for a certain period of time, several years. .
8. Development/recovery of lending – only through risk-sharing mechanisms. There are no other options at this stage. None of the banks will bear all the risk (I’m only talking about credit plus operational risk here) (if they take large volumes of assets, that’s a reason for more audits to see what kind of collective loan this is). Subsidized interest rates, guarantees, various types of insurance, led by 5-7-9. Alternative types of “lending” – lease factoring – will not happen quickly. Here the regulator is not helping much yet, it is also waiting.
9. Commissions – so far everything is safe there. But the “war of exchange and acquisition” is such that it could break out at any moment.
10. Gambling, currency exchange, other targeted things – all this is completely targeted and targeted measures are eliminated. Sometimes you just need to talk. There are no systemic risks.
11. Deposit rates? It looks like July, but I still think August is the last month of abundance. Then they will start to fall.
12. Can you deposit money in banks? It is possible, the banking system has never been more reliable for the population. Where exactly? Deposits and government bonds; or if you want some more profitable tool, then you will have to devote some time to it, first 10-12 hours a day, then – a full-time working day; This is no longer a passive investment.

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