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Delta, Ukraine's  fourth largest bank by assets, has restricted cash withdrawals, only a week after saying it had received  stabilisation funds  from the National Bank of Ukraine (NBU). 

The move comes after NBU head Valeriya Gontareva revealed that withdrawals in the Ukrainian banking sector so far this year  had reached 30% of deposits, and had accelerated in September.

Delta announced on September 22 that it was restricting client cash machine withdrawals  to UAH2500 (approximately $185) per day "to ensure as many clients as possible can use the bank's cash machines,"  adding that the restrictions could be lifted at any time. 

The move comes just over a week after the bank claimed to have received a stabilisation credit from the NBU.  The NBU announced on September 15 it had disbursed two stabilisation credits totalling UAH2bn (approximately $150m) to two systemic banks, because of a shortage of liquidity following deposit withdrawals and difficulty accessing foreign funding. 

The Finmaidan  internet site  quoted Delta Bank's owner and chairman, Mykola Lagun, as saying that Delta Bank was one of the recipients, alongside Privat Bank, Ukraine's largest bank.  Privat Bank, however, denied receiving any stabilisation credit.  Delta Bank did not reply to a request for confirmation that it had received a stabilisation credit. 

"In current conditions, the NBU is supporting the most stable and systemic banks with a large client base. Delta bank has over 4m customers, and over 9% of total banking system deposits. It is worth noting that the bank is supported by its shareholders, and its capital was previously increased by 60% to UAH3.7bn by shareholders [and chairman] Mykola Lagun and Cargill  [a US private commodities and financial company, which has a 30% stake]. This support has positively influenced liquidity," said Delta Bank chairperson Elena Popova in a statement quoted by Finmaidan.

A bne source close to  the NBU, however, disputed that Delta or Privatbank had received the stabilisation credits, saying that the credits had - surprisingly - gone to European-owned banks, Raiffeisen Aval and Ukrsotsbank, the country's second and sixth biggest banks respectively. Neither of these banks would comment. 
 
In an interview in Zerkalo Nedeli on September 20, Gontareva said the stabilisation credits - the first she had signed off on since taking on the job in June -  had gone to some of the country's largest banks, but refused to say which, except to rule out banks owned by well-connected egg oligarch Oleh Bahmatyuk.

Delta Bank depositors have been experiencing difficulty accessing their deposits for some months now, sources say, raising doubts about its business model. The bank has grown exponentially since the finance crisis in 2008 by snapping up loan portfolios of troubled banks, and also entire banks, despite before the crisis having been exclusively focused on consumer loans.  Part of Delta's strategy in buying up loan portfolios is believed to be to tap increasing amounts of NBU refinancing loans, by using  the newly acquired assets as collateral.

Delta's anomalous growth, rising from the 35th largest bank by assets in 2008 to the fourth largest, and its apparent ability to receive copious NBU refinancing, prompted rumours of close relations to top officials in the former administration of ousted president Viktor Yanuovych. The bank has denied those rumours. 

The latest bank Delta said it intended to acquire is Universal Bank, the Ukrainian subsidiary of Greek Bank Eurobank in a deal worth €95m, announced in August. Delta's willingness to splash out such sums on acquisitions contradicts reports of financial difficulties. But, according to  sources, the bank has not yet fulfilled any of its obligations under the deal. 

Delta Bank is not the only bank hurting, however. The banking system has been badly hit by deposit outflow since the start of the year, totaling UAH100bn (approx $8bn), according to Gontareva. Many banks limited customer withdrawals during the early months of the year, which was wracked by political instability because of the violent ousting of President Viktor Yanukovych. 

The war in East Ukraine led to a dramatic worsening of the situation, as locals withdrew cash before fleeing the region, many to Russia, and salary payments dried up. In the first two weeks of September, deposit outflow totaled UAH6.4bn (more than $0.5bn), according to Gontareva. "When I mention these figures in Washington, saying that we have had approximately deposit outflow reaching 30% of deposits, neither the World Bank nor the International Monetary Fund believed that the banking system could survive [under these conditions]," Gontareva said in the interview. 

According to the central bank, the stabilisation credits were provided partly in connection with the banks' difficulties accessing foreign funding. Another factor hitting banks with foreign funding has been international credit lines being closed just as the rapid slide in the value of the hryvnia made debt repayment difficult.

Gontareva dismissed allegations that banks receiving hryvnia funds from the NBU simply convert them to foreign currency, increasing pressure on the hryvnia, saying that the NBU has assigned 'curators' to oversee all the largest banks. But former CEO of Forum Bank, Yaroslav Kolesnik, told Forbes Ukraine that "[NBU] funds are used [by recipient banks] not to pay out deposits, but disbursed as credits or moved out of the country."

As a sign that the NBU is deeply concerned about the hryvnia, an order of September 22 forbid banks to sell more than UAH 3000 (approx $190) per day to any single individual. 

Forbes Ukraine also reported on September 22 that, as a measure to stabilise the banking system, the NBU had postponed repayment of refinancing loans owed by banks and due in September to December.