Safety deposit boxes are replacing bank deposits with demand for them increasing 50% since the beginning of the year

Photo: Fotobank.ua

The withdrawal of deposits from banks provoked an upsurge in the demand for safety deposit boxes in the financial institutions over the first half of the year. In January-June the occupancy rate of safety deposit boxes increased by more than 1.5 times from 50% to 80% compared with the first half of 2013, says Iryna Sarana, Chief of the Individual Savings Department at UkrInBank. The rise in popularity of safety deposit boxes among individuals can be explained by the fear of Ukrainians to keep their savings at home and their increased distrust in banks, experts claim. “The majority of bank customers place withdrawn deposits in safety deposit boxes. Demand is growing exclusively due to the protracted political crisis in the country,” says Sarana. It is quite difficult to evaluate the market of safety deposit boxes in money equivalent: the rate-setting policy and the capacity of depositaries of banks differ considerably. For instance, UkrInBank estimates the annual revenues from leasing safety deposit boxes in the banking system at around UAH 750 mn. Last year, net interest profit (the difference between commission profits and expenses) of Ukrainian banks amounted to nearly UAH 21 bn.

To hide in a box

The majority of bankers questioned by Capital confirm an increase in the demand for safety deposit boxes. The considerable growth in the interest of Ukrainians in safety deposit boxes was observed this past winter, when the conflict began in Kyiv, say representatives of the National Credit Bank. As the situation got worse, the number of people wanting to put their money in safety deposit boxes of banks increased. After the events in Crimea and the conflict in the east of Ukraine unfolded the demand for safety deposit boxes saw an upswing in practically all regions of the country. “According to my estimates, the interest towards the service grew by around 40-50%,” says Olha Steblevska, Head of the Cash Operations Department at National Credit Bank. Some clients indeed withdrew their money from deposit accounts and put it into safety deposit boxes, she said. “I cannot say, however, that this exclusively formed an increased demand. Often people who simply stopped feeling safe about their money decided to use the service of safety deposit boxes. They went to the bank to protect their valuables. Occupancy of safety deposit boxes at our bank has increased by a third since the beginning of the year,” summed up Steblevska.

In UniCredit Bank, the sixth largest bank in Ukraine by assets, the occupancy of safety deposit boxes in June increased by 10% compared to January. The demand increased because people became more uncertain that they would have the possibility to withdraw their deposits or money from their accounts at any moment, explains Chief of Deposit and Savings Department at UniCredit Bank Iryna Strepetova. Also, VTB Bank observed a 3% growth in the number of leased safety deposit boxes, informed Maryna Kshynina, Chief of Commission and Service Products Department at VTB Bank.

On the wave of demand

The hype around safety deposit boxes urged financial institutions that earlier did not provide this service to introduce it. Market players exploited the situation and hiked up the leasing rates for the opening of a safety deposit box. “Of 25 the leading banks in terms of assets and liabilities, 22 offer leasing of safety deposit boxes,” emphasized Sarana. The banker says that a small safety deposit box 5-8 cm in height is the most popular among customers. The average term of lease varies from one to six months. For using small or medium boxes, the client must pay UAH 50-70 per month, for large boxes – UAH 80-100 per month. Also, the refund value of the key grew to UAH 500-800. On average, the leasing rate for a safety deposit box is around UAH 4 per day. If the box is leased for a year, this figure is reduced 1.5-2 times.

“The re-issuing of documents, for instance, ownership right to assets, an apartment and agreements is a rather costly thing,” says Dmytro Havrykov, Retail Business Sales Director at Fidobank. “That is why many people prefer to keep them in a safety deposit box.” The anonymity of savings is the biggest advantage of safety deposit boxes, while the need to pay for the service without profiting from your own capital is its biggest flaw. Clients most frequently keep their money and documents in their safety deposit boxes and more rarely jewelry, works of art and weapons, says Sarana. The banks have no limitations for clients about the contents of their safety deposit boxes. Only explosives, drugs and other dangerous objects are prohibited.