Large-scale conflict over banking services

The National Bank strongly opposed “Ukrposhta”, as the Verkhovna Rada supported the latter’s involvement in providing affordable banking services to the entire population. Ukrposhta branches are located in the smallest towns of Ukraine, so it will be in great competition with all banking institutions. The National Bank states that this is a step towards increasing the state’s monopoly in the financial sector.

“This will allow Ukrposhta to provide affordable financial services to all Ukrainians, because even in the smallest towns and villages, unlike banks, there are post offices. And for the company itself, such changes will significantly expand the opportunities for activity and development, “said Minister of Infrastructure of Ukraine Vladyslav Krykliy.

The National Bank assessed innovation as follows:

Illogically. Uncompetitive. Risky. This is in three words to sum up our position on the idea of ​​allowing “Ukrposhta” to provide banking services. Such an initiative is envisaged by bills №2788-d and №2788, which can be considered by the Verkhovna Rada today. The National Bank opposes the adoption of these draft laws and the creation of a state “postal” bank.

Our arguments are as follows:

1. It is illogical. The role of the state in the banking sector should decrease, not increase. Reducing the role of the state will promote competition and, consequently, improve the quality of financial services. Today the share of the state is 55%. Together with the Government, we plan to reduce it to 25% by 2025 due to the partial privatization of state-owned banks. Expanding Ukrposhta’s status is a step towards increasing the state’s monopoly in the financial sector, not a step towards competition.

2. It is uncompetitive. “Ukrposhta” will be in a privileged position compared to the same banks. Think of yourself. The postal operator will receive all the benefits and opportunities of banking, but will not bear any responsibility. The postal operator does not need to obtain a banking license, does not need to comply with regulations and requirements for working with public funds. The NBU will be able to establish for “Ukrposhta” only the procedure for opening and maintaining accounts. That is, the NBU will not regulate the banking activities of “Ukrposhta”.

In addition, “Ukrposhta” will compete with other state-owned banks – “Oschadbank” and “PrivatBank”. We are for competition, but not of state-owned banks for the same customers. Fighting on one “piece of land” will reduce the profitability of all. There will be no winners, everyone will lose. As a result, the state budget will be lost, including the additional expenses of “Ukrposhta”.

3. This is risky. “Ukrposhta” doesn’t understand the real cost of doing banking. Banks spend on building financial monitoring systems, risk control, other people’s money management, compliance, data, and branch security. In addition, Ukrposhta has lower expertise in financial monitoring than banks. Therefore, there is an increased risk of money laundering.

Therefore, we called on the Government and the Verkhovna Rada to express a common position and reject these bills.

Natalia Tolub