Diversification and securitization of credit portfolios of Ukrainian banks

Abstract

The article is devoted to the analysis of diversification of loan portfolios and securitization of financial assets by Ukrainian banks. The advantages and disadvantages of diversification and securitization use are discussed. The volumes of such operations and the separation of the actual lending market by types of economic activity, territory and in the sectional frame of individual persons and economic agents are determined. The rules of behavior and functions of participants of securitization, as well as its main varieties, are revealed. The forecasting of the ability of Ukrainian banks to securitize assets is carried out, but most Ukrainian banks can not securitize their assets, which is explained not only by small volumes of lending, but also by other reasons, including: underdeveloped legal base (legal status of a specialized legal company is not defined and the specifics of taxation of such operations have not been clarified); weak infrastructure of financial and stock markets, lack of financial instruments; inflexible tax system; low credit rating of Ukraine. In addition, the level of development of the financial and stock markets is not sufficient. According to the results of the study, it was concluded that there is an uneven distribution of loans both by type of economic activity and by geography: about 33 % of loans were provided to clients of wholesale and retail trade; the largest share of loans was concentrated in the Kyiv region – 60 %. The analysis reveals the territorial unevenness of banking lending services. The research shows the potential ability of Ukrainian TOP-Banks to securitize assets. The average amount of financial assets that were securitized was US $ 55 million. The analysis showed the inappropriateness of securitization for auto-lending and the high suitability for securitization of mortgage loans to individuals. Asset securitization for a typical Ukrainian bank encompasses a large number of clients who have been granted loans, which necessitates a clear definition of the rules of conduct and functions of the securitization participants.