The Belarusian banking sector faces new challenges
At first glance, not much has changed in the Belarusian banking sector. The number of banks has been constant for years at a total of 24. The size of the sector, measured by the ratio of assets to GDP, has also remained relatively stable. At the same time, about two-thirds of the sector is dominated by state-owned banks, which primarily provide financing to state-owned enterprises. Banks with Russian capital also play an important role, which leaves private (including Western) banks with a correspondingly small market share.
At present, the COVID-19 pandemic and political uncertainty are serious risk factors for the further development of the sector. The strong depreciation of the Belarusian ruble has negative implications for liquidity in the short term, as well as for solvency in the medium term. Banks still have some reserves, but these are limited. Consequently, large efforts should be made to preserve financial stability.