Just in time for Halloween this year I heard a special tale of financial horror from one of my close friends in Ukraine. Its been said that when the US economy gets the sniffles the developing world gets pneumonia – and Ukraine has one terrible case of the financial chills.
My friend, who has been saving and selling some property in eastern Ukraine is just about ready to purchase a beautiful new apartment on the outskirts of Kyiv. Well, this was the plan until two days ago when all of her bank accounts were frozen and she was given notification that her money would be unavailable “for a period of time.” This unassuming, but terrifying, message was given to depositors at the sixth largest bank in Ukraine, Prominvestbank (Quarterly earnings report in English). It seems that just as citizens were getting used to trusting banks, after the financial collapse of the Soviet banking system from 1989-91 and the financial crisis of 1998, the rug has been pulled out from under depositors once again.
So as my friend’s life savings hangs in limbo – and she wonders if she will ever get to buy that apartment -the local financial gurus are offering insightful advice:
“I am cautiously optimistic the Ukrainian banking system will in general withstand the crisis,” said Geoffrey Smith, an independent financial analyst in Kiev.
With confident forward looking statements like this its a wonder there haven’t been bank runs!