NBU updates its calculation of capital adequacy ratios

The National Bank of Ukraine has updated the methods used by banks and banking groups to calculate capital adequacy ratios, taking settlement risk into account.

This is stated in an NBU announcement, the Ukrainian News agency reports.

This risk reflects the probability of losses or lost income from transactions involving securities, commodities, or foreign currency in the event that counterparties fail to settle such transactions. This risk must be covered by capital.

The relevant amendments to the Instruction on the Procedure for Regulating the Activities of Banks in Ukraine and the Regulations on the Procedure for Regulating the Activities of Banking Groups represent another step toward aligning the National Bank’s regulatory acts governing banking activities with EU standards.

The capital adequacy ratio is the primary indicator of a bank’s safety. It shows what proportion of risky loans a bank can cover with its own funds (capital). If customers fail to repay their debts, this reserve will protect depositors’ funds from losses.

The amendments stipulate that capital adequacy ratios will take into account the minimum counterparty risk:

as of August 1, 2026, for banks;

as of January 1, 2027—for banking groups.

The amount of risk is determined in accordance with the Regulation on the Procedure for Determining the Minimum Settlement Risk by Ukrainian Banks and Banking Groups. The practical implementation of this provision was carried out using a test period, which demonstrated that settlement risk is currently not a significant issue for the banking system as a whole, as it arises only sporadically at individual banks.

The updated approaches were approved by Resolution No. 71 of the Board of the National Bank of Ukraine dated June 30, 2026, which takes effect on July 31, 2026, except for the requirements for banking groups, which take effect on December 31, 2026.

As the Ukrainian News agency earlier reported, the National Bank had previously given financial companies the opportunity to test the algorithms for calculating the updated capital adequacy requirements.