Ukraine State Bank Oshchadbank Sees Improved Profit

KIEV, Ukraine -- State bank Oshchadbank, a key link in financing Ukraine's troubled energy company Naftogaz, forecasts an improved first half profit in 2009 of 600 million hryvnias ($79 million), its chief executive officer said on Wednesday.

Oshchadbank headquarters in Kiev, Ukraine

The bank recorded a profit of 180.2 million hryvnias in the same period last year.

"The state has turned towards Oshchadbank and we will have good financial results this year," Anatoly Gulei told reporters on the sidelines of a government meeting.

Ukraine's government since last year has actively used Oshchadbank, the state savings bank and third largest in Ukraine, to support financially-troubled state energy company Naftogaz.

"We are an anti-crisis bank. This is our policy and I believe it is the correct policy," Gulei said. "It enabled us to boost our assets, receive capital and support real sectors of the economy and the government."

The government owns 100 percent of Oshchadbank and boosted its capital at the beginning of the year to 13.9 billion hryvnias from 900 million a year earlier.

Gulei said the bank's capital would be further increased, partly from reinvesting profits.

Oshchadbank has regularly issued credits to enable Naftogaz to make payments for shipments of Russian gas in accordance with plans overseen by Prime Minister Yulia Tymoshenko's government.

President Viktor Yushchenko, the prime minister's former ally turned arch rival, has denounced the practice as liable to lead to the energy company's collapse. Russian President Dmitry Medvedev and other top officials have suggested that Naftogaz is all but insolvent.

Despite its improved figures, Oshchadbank's credits to Naftogaz still violated rules limiting the amount of credits it can extend to a single borrower. This, Gulei said, would be corrected once the government boosted Naftogaz's capital.

"They will have their capital increased, settle their debts with us and the problem will be solved," Gulei said.

"There is a government resolution for 18 billion hryvnias. We hope the finance ministry will issue bonds which we can take ... and settle up with the central bank."

Gulei gave no figures for the amount of credits issued to Naftogaz.

Acting Finance Minister Ihor Umansky, interviewed by the weekly Zerkalo Nedeli, put the figure at no less than 18.6 billion hryvnias. ($=7.61 hryvnias).

Source: Guardian UK


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