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UPDATE 2-Ukraine picks 7 banks for recapitalisation

(New story with deputy minister)

KIEV, April 16 (Reuters) - Authorities in Ukraine have identified seven banks for recapitalisation, Deputy Finance Minister Ihor Umansky said on Thursday.

Umansky identified the banks as Ukrgazbank, Finance and Credit, Nadra, Ukrprombank, Rodovid, Imexbank and Kyiv.

“These are seven banks whose shareholders were not in a position to assume the obligation of increasing capital to the required level on their own,” Umansky, currently Ukraine’s Acting Finance Minister, told Reuters by telephone.

He said all banks undergoing recapitalisation would have to be placed in receivership. Four banks on the list, Ukrprombank, Nadra, Rodovid and Kyiv, are already in such a position.

Umansky said the three other banks have given no cause for doubts in terms of solvency, but would be placed in receivership as this was required by the procredure set down by the government and central bank.

“This is an instrument to keep watch on the effective use of state funds,” he said.

Nadra currently holds down 9th place among Ukraine’s approximately 180 banks in terms of assets, Finance and Credit (F&C) 14th, Ukrprombank lies 15th, Ukrgazbank 17th, Rodovid 20th, Imex 30th and Bank Kyiv 39th.

Umansky, in earlier comments quoted by Interfax Ukraine news agency, included Bank Khreschatyk on the list of banks to be recapitalised, but later said this had been an error and included Bank Kyiv instead. Ukrgazbank, F&C and Imex are among banks whose shareholders have asked the government to take a share in their ownership.

A banking source had earlier said that two banks -- Ukrgazbank and F&C -- were the first to be selected for recapitalisation.

Altogether, 11 Ukrainian banks are in receivership.

The state budget allows for the government to allocate up to 44 billion hyrvnias ($5.7 billion) for recapitalising banks. ($=7.7 hryvnias) (Reporting by Natalya Zinets, writing by Ron Popeski; Editing by Andy Bruce)

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