Trust but Verify
160 Ukrainian banks pursue different methods to appeal to us, prospective clients, and customers. Some tout their "most beneficial" financial offerings, some consider their long operation time (since entering the Ukrainian financial market) to be their core advantage…160 Ukrainian banks pursue different methods to appeal to us, prospective clients, and customers. Some tout their "most beneficial" financial offerings, some consider their long operation time (since entering the Ukrainian financial market) to be their core advantage…
What should we trust? We asked this question to Kyiv Regional Office of UkrGasBank.
Today, many banks have the words International or European in their name. This does not imply that they are International or European in the classical meaning of the word. Foreign capital share may account for less than 20%.
The trend is just a tribute to fashion, a marketing mix to win clients striving to meet the clients' expectations related to reliability of the bank or, more exactly, the safety of the deposits.
However, depositors should remember that banks with foreign capital are not always the best from the deposit profitability point of view.
Sergey Malomuzh, Director of Kyiv Regional Office of UkrGasBank comments on the situation: “In most cases, Ukrainian people are oriented towards high interest rates and deposit profitability. As a rule, most banks with foreign interest have cheaper and longer term capital sources abroad. This is why they have no objective of taking the lead in interest rates”.
The core operations of a full service bank include taking deposits and extending loans.
In the former case, a client deposits funds to an account thus contributing to the paid resource base for the bank’s operations; in the latter, a bank lends money to borrowers and earns interest.
“A bank's earnings amount to the difference between the price of deposits taken and the price of loans extended. In order to keep the bank in the market, the interest rates on loans should not exceed the interest rates on deposits greatly”, says the banker.
Banking experts caution on going too fast towards various special events and advertising campaigns offering "super good" terms. Inflated interest rates on deposits may be a sign of instability in the financial institution. Apparently, low interest rates on loans may in fact imply a number of payments that some banks tell nothing about.
"We try to maintain steady interest rates and keep the balance establishing optimal terms for clients served by UkrGasBank".
What should we trust? We asked this question to Kyiv Regional Office of UkrGasBank.
Today, many banks have the words International or European in their name. This does not imply that they are International or European in the classical meaning of the word. Foreign capital share may account for less than 20%.
The trend is just a tribute to fashion, a marketing mix to win clients striving to meet the clients' expectations related to reliability of the bank or, more exactly, the safety of the deposits.
However, depositors should remember that banks with foreign capital are not always the best from the deposit profitability point of view.
Sergey Malomuzh, Director of Kyiv Regional Office of UkrGasBank comments on the situation: “In most cases, Ukrainian people are oriented towards high interest rates and deposit profitability. As a rule, most banks with foreign interest have cheaper and longer term capital sources abroad. This is why they have no objective of taking the lead in interest rates”.
The core operations of a full service bank include taking deposits and extending loans.
In the former case, a client deposits funds to an account thus contributing to the paid resource base for the bank’s operations; in the latter, a bank lends money to borrowers and earns interest.
“A bank's earnings amount to the difference between the price of deposits taken and the price of loans extended. In order to keep the bank in the market, the interest rates on loans should not exceed the interest rates on deposits greatly”, says the banker.
Banking experts caution on going too fast towards various special events and advertising campaigns offering "super good" terms. Inflated interest rates on deposits may be a sign of instability in the financial institution. Apparently, low interest rates on loans may in fact imply a number of payments that some banks tell nothing about.
"We try to maintain steady interest rates and keep the balance establishing optimal terms for clients served by UkrGasBank".
08.10.2006