KIEV, May 11 - The Ukrainian banking sector remains subdued, constrained by the still large stocks of problem exposures on banks' balance sheets and periods of turbulence in hryvnia liquidity, Fitch Ratings has said in a newly published special report.

"Ukrainian banks' Long-term Issuer Default Ratings (IDRs) are constrained in the 'B' category as a result of high country risks and still weak asset quality and performance. Upgrades of foreign-owned and state-owned banks would require an upgrade of the sovereign ('B'/Stable), which is unlikely in the near term. A sovereign downgrade could result in the downgrades of banks' Long-term IDRs, while a marked depreciation of the hryvnia, significant deposit outflow or renewed deterioration of asset quality could lead to a lowering of banks' Viability Ratings," the agency said.