Stanislau Bahdankevich: Collapse Of Banking Sector Is Real

According to the former head of the National Bank, the growth of defaulted loans is a significant threat to the stability of the banking sector.

Overdue debt on loans and credits of Minsk organizations as of September 1, 2016, has amounted to 349.4 million denominated Belarusian rubles. This number has increased by 2.1 times if compared to January 1, 2016 and by 23.6% since the beginning of August, the National Statistical Committee informs.

The former head of the National Bank of Belarus Stanislau Bahdankevich said in an interview with Radio Svaboda, that the growth of defaulted loans is a significant threat to the stability of the banking sector of Belarus.

“Of course, all this has been growing in the banking system like a rolling snowball since the beginning of the crisis. The thing is that the loans were granted primarily due to deposits rather than bank capital, at the expense of attracted resources, both internal and external.

Today there is a threat to banks' liquidity. This is a serious problem. It is still under a certain control, there are certain reserves in the banks in case of non-payment. But the threat is growing. This is all has connection to the economy; it happens because the export is falling, unprofitability of the real sector is growing. The authorities maintain the status quo, they do not take any breakthrough steps to revive the economy,” – he says.

Bahdankevich doesn’t forecast that the banking sector will collapse in the coming year, but further, the situation may get out of control.

“If no measures are taken, such collapse is quite possible within the next several years. I mean, if the authorities continue to deny the existence of the crisis and will not take tough measures,” – the former head of the National Bank of Belarus said.