Ukraine’s top-10 bank faces liquidation

(CC By Chris Potter)

The Ukrainian bank Finance&Credit lost its liquidity.

If you are Russian better not apply for a job abroad.

The 2016 Czech state budget would promote economic growth and employment.

Gross wages were up in Hungary.

Czech Republic

After the tripartite council’s meeting on Friday, September 18, Prime Minister of Czech Republic Bohuslav Sobotka announced the 2016 Czech state budget would promote economic growth and employment. He and his government will be approving the 2016 draft budget on September 23. By the end of September the bill has to be sent to parliament.
The Social Democrats (CSSD, Sobotka’s party), the ANO movement and the Christian Democrats (KDU-CSL) has already confirmed they’d reached the agreement on all major issues of the budget. The revenues planned are CZK 1179bn, the expenditures are CZK 1249bn and the budget deficyt is CZK 70bn.

Bohuslav Sobotka also confirmed money to cope with the migration crisis. The sums would be available in the next year’s budget, both in the budgets of the individual ministries and in the budget reserve for unexpected developments.

The representatives of Czech employers and of trade unions demanded on Friday raising expenditures on applied research, on education and on health care. (There are 450000 unemployed people in Czech Republic and but at least 100000 vacant jobs, Sobotka explained).

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Ukraine

Mark Rachkevych from Moscow Times writes about the multimillionaire Kostyantyn Zhevago and his private bank (one of the “pocket banks of Ukraine”). The bank Finance&Credit lost its liquidity (Zhevago didn’t pay related-party loans to the bank by selling his non-core assets) and Ukraine’s central bank announced on Friday its insolvency.

In a statement released on its website, the NBU said that the majority of the bank’s assets were tied to loans to businesses controlled by the Poltava businessman and lawmaker, whose net worth Forbes estimates is $730 million.

Since the beginning of the economic crisis last year, the banking sector is facing strong turbulences. Within a year more than 50 banks declared insolvency.

Finance&Credit had been in trouble for the past seven months. Its rescue plan involved recapitalization by converting shares of its largest depositors into equity with a buyback option and liquidity injection, according to Kyiv-based investment house Investment Capital Ukraine.

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The details of debt restructuring law. The Holos Ukrainy parliament’s newspapaer reveald on Saturday a few laws signed by Ukrainian President Petro Poroshenko. As we read:

– the agreement includes an immediate 20% haircut from principal debt and a four-year grace period for the payment of the remaining debt: the deadline was rescheduled from 2015-2023 to 2019-2027.

– new dollar-denominated eurobonds will be issued in nine tranches that are almost equal in value in exchange of 14 existing issues of eurobonds at an average weighted coupon rate of 7.22% per annum (11 issues of sovereigns and three issues of Fininpro’s government-backed loan participation notes) and several government-guaranteed loans (Ukravtodor, Pivdenne design bureau, and Ukrmedpostach). The new bonds will be paid every year in 2019-2027 at a rate of 7.75% per annum. Interest accrued on the existing securities prior to the planned date of new issues will be securitized into new eurobonds.

– eurobond holders will be given 20-year government derivatives proportionally to their share in the total debt to be restructured. Yields will be paid in cash, in U.S. dollars, in amounts depending upon future dynamics of Ukraine’s real GDP growth.

The income mentioned in c) point would be bound to country’s economy performance. If annual GDP growth is 3%, no income will be paid on the derivatives. If the real GDP increases by 3-4%, securities will yield 15% of the surplus of GDP growth above the 3% level, and once it is over 4%, the same plus 40% of the surplus of GDP growth over 4%.The terms and conditions regarding the governmental derivatives will only be effective after Ukraine’s nominal GDP increases 1.5 times to reach $125.4 bn.

The bill restructuring the country’s sovereign debt was passed by the Verkhovna Rada on Thursday, September 17. The bill was based on the agreement reached by Ukraine’s Finance Minister and private-sector creditors in the end of August. The deal is restructuring about $18 bn of the country’s foreign debt.
The most recent IMF forecast for Ukraine’s GDP in 2019 is UAH 3.183 trillion.

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Hungary

Hungary’s Central Statistical Office (KSH) reported an increase of wages by 3.1% year-on-year. The average gross wage in July 2015 was 244,171, and the net wage: HUF 159,933. That include workers employed by the government (public works programme) who are paid less than minimum wage. Once we exclude them, the gros wages are up 3.8% (and the average wage is HUF 257,922).

In the business sector, which includes state-owned companies, gross wages were up 3.7% at HUF 257,593, while in the public sector, gross wages increased 1.5% to HUF 218,603, KSH data show.

Also the number of employed in Hungary rises. In July it was up 2.9% year-on-year, reaching 2,921,600 (including 202,800 full-time fostered workers).

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Victor Orban among the dirty dozen who ruined Schengen

Politico journalist Michael Binyon publishes the rank of politicians who ruined the Schengen agreement and cause threat to EU26 stability and safety. Among Americans and Muslim is only one leader from CEE countries – Victor Orban.

We read:

The hard-line right-wing Hungarian prime minister has opposed what he called the EU’s “misguided immigration policy” and has appalled Muslim refugees by saying he was defending the Christian nature of Europe against a Muslim influx. A maverick politician, whose nationalist and authoritarian policies have provoked opposition in Brussels, he has raised the temperature over the migrants by building a razor-wire fence with Serbia and evicting migrants from trains, leading to distressing photographs of the confrontations. By insisting migrants were a German, not a European, problem he has further weakened Europe’s ability to find a common solution.

The others who ruined Schengen are: Barack Obama, George Bush, Marine LePen, Ayoub el-Khazani, Mehdi Nemmouche, Bashar al.-Assad and Recep Tayyip Erdoğan. >>More about

Russia

A thrilling story from The Moscow Times. In 2010 Gennady Kravtsov applied for a job in some Swedish defense company. He wrote his cv and application letter and translated it with the online tool. Four years later he was arrested on the street by security service officers and put to jail.

He is now detained and prosecutors want to send him to jail for 15 years. Today we will know what the sentence is. The clue is Kravtsov is an engneer. He specializes in satellites. And he worked for Russia’s military intelligence agency GRU between from 1999 to 2005.

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What’s up in indexes?

Friday was the worst for Warsaw and Prague. WIG20 and PX dropped by (respectively) 1.42% and 2.58%. Other CEE indexes got along with investors.

BUX index (of the Budapest Stock Exchange) was up 0.37% on Friday, September 18 with 2119.26 index points. On Thursday it was 21040.86. From year-end it’s up 26.96%.

BET (of Bucharest) ended down 0.35% on Friday, falling from 7138.29 index points to 7113.40 index points. But it is up 0.43% from year-end.

PX (of Prague) fell from 1009.49 index points to 983.45 index points on Friday, dropping by 2.58%. From year-end it’s up 3.88%.

WIG20 (of Warsaw) ended down 1.42%: from 2199.46 index points on Thursday to 2168.19 index points on Friday. From year-end it fell by 6.38%.

SOFIX (of Sofia) is also down. It dropped by 0.22% on Friday after falling 0.36% on Thursday. On Friday it was 444.44 index points. And from year-end it dropped by 14.87%.

OMX (of Tallinn) fell down gently from 887.42 index points on Thursday to 887.17 on Friday (the drop is 0.03%). It is up 17.50% from year-end.

OMXV (of Vilnius) increased from 486.76 index points on Thursday to 487.44 on Friday (being up 0.14%. And from year-end it is up 7.74%.

SAX (of Bratislava) grows and grows. From 264.71 on Thursday to 266.56 index points on Friday. So it was up 0.70%. And it grew by 19.90% from year-end.

UX (Ukraine) is still falling down. It dropped by 1.11% (and from year-end it dropped by 8.06%. On Friday it was 950.06 (while on Thursday it was 960.71 index points).

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