NBU introduces LCR and NSFR liquidity standards for banking groups

The National Bank of Ukraine (NBU) introduced prudential liquidity standards on a consolidated basis - liquidity coverage ratios (LCR) and net stable funding ratios (NSFR).

This follows from a statement by the NBU, the Ukrainian News agency reports.

These standards for banks were introduced in Ukraine in 2018 and 2019, respectively.

The introduction of LCR and NSFR standards for banking groups is another step towards bringing the regulations of the NBU closer to the standards of the European Union.

The LCR norm reflects the minimum required level of liquidity of the banking group to cover the net expected outflow of funds within 30 calendar days; taking into account the stress scenario, NSFR is the minimum required level of stable financing of the banking group over a one-year horizon.

Phased implementation of new requirements is foreseen:

• by October 1, 2024, banks that are responsible persons of banking groups must develop intra-group regulations regarding the calculation of LCR and NSFR;
• from October 1, 2024, a six-month test period for the calculation of LCR and NSFR will begin, taking into account the results of which the issue of canceling the standards of current liquidity (Н5к) and short-term liquidity (Н6к) will be considered;
• from April 1, 2025, banking groups must comply with the normative value of LCR and NSFR in the amount of at least 100%.

Corresponding changes to the Regulations on the Procedure for Regulating the Activity of Banking Groups, as well as clarifying changes to the Instructions on the Procedure for Regulating the Activities of Ukrainian Banks, were approved by Resolution 2 of the Board of the NBU of January 5, 2024, which will enter into force on April 1, 2024.

As the Ukrainian News agency earlier reported, NSFR determines the minimum level of bank liquidity over a one-year horizon and is calculated as the ratio of the amount of available stable funding to the amount of required stable funding, where the amount of available stable funding is the sum of the component liabilities weighted by the appropriate coefficients set by the NBU, which reflect the level their stability, as well as the amount of necessary stable financing - this is the sum of the constituent assets and off-balance sheet liabilities weighted by the relevant coefficients established by the NBU, which characterize their liquidity.