Determination of Bank Business Model Types in Ukrainian Banking System

Onyshchenko, Yulia; Zaiats, Eduard

doi:10.32782/easterneurope.27-20

Eastern Europe: Economy, Business and Management

2020

DOI: 10.32782/easterneurope.27-20

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Determination of Bank Business Model Types in Ukrainian Banking System

Yulia Onyshchenko

Eduard Zaiats

Abstract: ВИЗНАЧЕННЯ ВИДІВ БІЗНЕС-МОДЕЛЕЙ БАНКІВ В БАНКІВСЬКІЙ СИСТЕМІ УКРАЇНИ DETERMINATION OF BANK BUSINESS MODEL TYPES IN UKRAINIAN BANKING SYSTEM Онищенко Ю.І. кандидат економічних наук, доцент, доцент кафедри банківської справи, Одеський національний економічний університет Заяць Е.Л. студент факультету фінансів та банківської справи, Одеський національний економічний університет

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2024

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Cited by 4 publications

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“…In another paper, Onyshchenko and Zaiats (2019) identified five main business models of banks: (1) traditional, (2) corporate, (3) retail, (4) universal, and (5) investment. They did this using six variables: (1) interbank loans (as a % of assets), (2) corporate loans (as a % of assets), (3) household loans (as a % of assets), (4) investment portfolio (as a % of assets), (5) corporate deposits (as a % of assets), and (6) household deposits (as a % of assets) (as of 1.01.2018).…”

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Business Models of Ukrainian Banks: the Impact of the Revolution of Dignity, the COVID–19 Pandemic, and Russia’s Military Aggression

Kravchuk

2024

CER

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The purpose of the article is to identify key banking activity models in Ukraine and show how they changed under the influence of the Revolution of Dignity, the COVID–19 pandemic, and the imposition of martial law. The proposed method uses cluster analysis of the main indicators for banking activity (concerning assets, liabilities and income) based on Ward’s agglomerative hierarchical clustering algorithm and the Tau index in the NbClust package as the criterion for evaluating the optimal number of clusters. The research covers all Ukrainian banks, spanning the period 2013–2022. In 2014 (after the Revolution of Dignity), the actions of the National Bank of Ukraine (NBU) had a positive impact on the models of Ukrainian banks: there was no opaque model of banks and banking models became more transparent and more resilient to financial shocks. Between 2021 and 2022, five banking models were identified: universal banks, wholesale funding banks, corporate‑investment banks, retail banks, and commission banks. The negative impact of COVID–19 on the Ukrainian economy was reflected in all banking models by the following: (1) a significant increase in the role of securities in assets, which was caused by a decrease in lending due to an increase in their riskiness; (2) the use of central bank funds to liabilities management, which was evidence of a deterioration in financing conditions in the deposit market. The following main changes in Ukraine’s banking system at the end of 2022 (during the war) were identified: (1) a decrease in the number of banks that mainly use funds from the NBU to support their activities; (2) the closure of only four banks by the NBU (including two with majority shareholders from Russia) during the year; (3) an increase in the share of the non‑government debt securities portfolio in banks’ assets; (4) declines in ROE and ROA for all banking models during the war, and three banking models became unprofitable; (5) the significantly higher share of non‑performing loans in the credit portfolio for all banking models, especially for the retail banking model. The value‑added of this research is the analysis of how banking models in Ukraine have changed at the micro level (reflected in the financial statements) inter alia in wartime.

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Business Models of Ukrainian Banks: the Impact of the Revolution of Dignity, the COVID–19 Pandemic, and Russia’s Military Aggression

Kravchuk

2024

CER

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Risk management through a Kohonen map bank business model survey: The case of Ukraine

Zarutska,

Dobrovolska,

Masiuk

et al. 2024

Banks and Bank Systems

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The purpose of this paper is to identify the peculiarities of banks’ business models and assess their risks, which is especially relevant in the context of the war in Ukraine since 2014. The information base is the published statements for each month of 63 Ukrainian banks for the period from 1 January 2018 to 1 January 2024. The number of indicators is chosen in an empirical manner. Business models are investigated using the method of structural-functional groups of banks, which allows estimating large arrays of financial indicators, grouping banks with similar characteristics and drawing conclusions about the main risks. It is convenient to use neural networks, namely Kohonen’s self-organizing maps, to estimate large data sets. The largest group of banks places a significant part of assets in government securities and has an unstable resource base. The share of these banks in the system as of January 1, 2024 is 38% and total assets are 10%. The second group by number of banks is focused on corporate lending with a high share of current resources in liabilities, and includes 21% of banks, whose assets account for 31% of total assets. State-owned banks, PrivatBank and OschadBank, account for 35% of total assets. The business models of these banks are characterized by dependence on retail funds, a high share of investment operations, and high credit and currency risks. Ukraine’s banking system has significantly developed a risk-oriented approach to management, which allowed it to maintain stability in the face of a full-scale war.

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Business Models of Ukrainian Savings Banks

Bortnikov,

Drachko-Yermolenko

2024

Fìnansi Ukr.

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In the banking system, savings banks represent a special component, as they form their resource base mainly due to the accumulation of population savings. Problem Statement. Ukrainian savings banks are a factor in ensuring financial stability, but at the same time they are vulnerable to depositors’ panic in conditions of systemic stresses. Therefore, the analysis of their activities is important for understanding the prospects of the banking system. Savings banks in Ukraine differ significantly in scale and level of business technology. Leading savings banks are planned by the state for privatization, so they are designed to improve their investment attractiveness, at the same time, the status of state ownership gives such banks additional advantages in the market. The purpose is a comparative analysis of the business models of savings banks in Ukraine and the behavior of such banks on the market. Methods. The authors used the methods of comparative analysis, logical generalization, analysis and synthesis. Results. In Ukraine, savings banks are divided by origin into two categories ( state and private capital), and by a business model into those, focused on lending to business clients and those with a balanced composition of the loan portfolio. The monopoly of the state bank was broken by the entry of banks with private capital to the market. Savings banks are identified based on the ratio of funds raised by individuals to the total amount of balances on customer accounts. A blueprint of two business models for the savings bank segment was built, the structure of assets and liabilities, the development of the branch network and market positions in terms of deposits were compared. The analysis of the efficiency of a sample of savings banks was carried out and compared with the indicators of the banking system (profitability, return on operating expenses, profitability of the loan portfolio, cost of funds of individuals, the branching of branch network), as well as the impact of the business model on the investment attractiveness of banks was assessed, the volumes of savings and allocation of funds in loans to individuals were compared. Conclusions. The research made it possible to identify a specific group of banks with heterogeneous business models: firstly, banks that use public funds mainly to finance business clients, secondly, banks that have a relatively balanced credit portfolio for individuals and legal entities. The segment of Ukrainian savings banks is clearly dominated by two large state-owned banks, and given the state of war and citizens' trust in the state itself, there is no reason to expect a change in leaders. Digitization of products and processes will allow savings banks to compensate for the reduction of the branch network, but other banks also take advantage of this opportunity. and return on investment in technological innovation projects will bring effect in the medium term. To a large extent, the amount of savings accumulated by banks depends on two factors - customer trust and assessment of service quality. Savings bank managers should pay primary attention to this. Excessively high dependence of banks on the funds of individuals can be considered as a disadvantage, rather than as an advantage, if a bank itself works inefficiently.

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Determination of Bank Business Model Types in Ukrainian Banking System

Cited by 4 publications

References 4 publications

Business Models of Ukrainian Banks: the Impact of the Revolution of Dignity, the COVID–19 Pandemic, and Russia’s Military Aggression

Business Models of Ukrainian Banks: the Impact of the Revolution of Dignity, the COVID–19 Pandemic, and Russia’s Military Aggression

Risk management through a Kohonen map bank business model survey: The case of Ukraine

Business Models of Ukrainian Savings Banks

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