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Robert Kirchner, Anne Mdinaradze

The Belarusian Banking Sector: Trends and Developments

Considering the recent sharp rise in non-performing loans in Belarus, it is worthwhile to take a closer look at the banking sector as a whole.

  • Belarus
NL 45 | 2017
Financial Markets

Currently, there are 24 institutions operating, which is a drop by almost 25% since 2013. However, only very small institutions were closed, with no material effects on the asset base of the sector. Currently, banking assets stand at 75% of GDP, higher than in Ukraine, but lower than in neighbouring Poland and Russia. The state dominates the banking system in terms of ownership (63% of assets), while banks with Russian (and often state) capital add a further 27%. This leaves little room for private banks in the market; the biggest one is Priorbank (owned by Austria’s Raiffeisen Bank) on rank 7. A worrying recent trend is the increase in nonperforming loans, which peaked at about 15% in late 2016. This reflects the difficult economic circumstances, in particular in the manufacturing and agricultural sectors. A further and related problem is directed lending, which remains a widespread phenomenon. Removing problematic assets from banks’ balance sheets and increasing their commercial orientation will give a much-needed boost to the sector and the economy.

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