With less political uncertainty (at least for now - local elections are expected to take place in Nov-2010) and a new government in place, now key focus has to be on accelerating growth, introducing jump-starting reforms in many industries, including banking. I see re-start lending as one of the key targets both for the Government-Central Bank. There are many obstacles to re-open the credit channel, including lack of the stable funding base in local currency, high inflation, low confidence and huge problems with creditor’s protection rules and practice.
 

I would also mention another factor which negatively influences a sustainable growth of the banking system: its high fragmentation. Small undercapitalized banks are the large majority of the 180 banks of the Country, and this bring to confusion among consumers, attracted by extremely high interest rates offered by them for deposits, to not physiologic cases of insolvency, to further depressing the system confidence, low lending power and increasing the cost of a prudent supervision.
 

Currently there is no proper alternative to organic growth for the key market or regional players, but consolidation might have positive effect on the supply of credit for economy recovery. I would expect that Central Bank will start encouraging banking consolidation in form of improving regulations to ease the merger process or via enforcement of bank capital requirements.
 

There are obviously other points to be touched among which: the register of the foreign investments - in my understanding there is already a draft of a new law in the Parliament, but I would like to comment that in the current circumstances the Country should be open to investors to the most extent and not set further barriers even if they are just formal or bureaucratic. NBU regulations #107-109 also don’t help much in management the currency exposure risk and the new strict NBU requirements on cash desks armoring not only can be discussed for their capability to contain the criminal actions (they can be even more dangerous for the public in case of armed robbery), but also don’t appear to be a priority instrument to allow banks to recover (to respect the requirements huge expenses are expected) and focus on the primary functions to serve as the best financial intermediary for the economy: managing safely the savings of population and companies and provide new credits for the real economy.