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Economy 2019-11-15T04:16:30+02:00
Ukrainian news
NBU Calls 14 Banks Systemically Important

NBU Calls 14 Banks Systemically Important

NBU, systemically important banks, bank

The National Bank of Ukraine has defined 14 systemically important banks in compliance with an updated methodology.

The NBU has said this in a statement, Ukrainian News Agency reports.

The new methodology has allowed considerable expansion of such banks.

A systemically important bank is a bank that if bankrupt or improperly functioning causes emergence of systemic risks.

The National Bank pays particular attention to the activities of systemically important institutions, because potential difficulties in their work may have a negative impact on the work of the entire financial system.

Since 2016, three banks have continuously been declared systemically important banks: PrivatBank, Oschadbank and Ukreximbank.

In compliance with the updated methodology, now the systemically important banks are: PrivatBank, Oschadbank, Ukreximbank, Ukrgasbank, Alfa Bank (Ukraine), Ukrsotsbank, Raiffeisen Bank Aval, First Ukrainian International Bank, UkrSibbank, TAScombank, Universal Bank, Kredobank, OTP Bank, and Pivdennyi bank.

Receipt of the status of a systemically important institution imposes an additional load on banks; they must fulfill certain increased requirements to ensure their safety margin.

Therefore, stating January 1, 2020, the systemically important banks will have to meet the increased norm indicators: quick liquidity ratio (Н4) – at least 30%; peak size of credit risk per counteragent (Н7) – not more than 20%.

Besides, such banks should form, in addition to the normative value of capital adequacy, a buffer of systemic importance, which will take effect on January 1, 2021.

The size of such buffer will depend on the value of the indicator of systemic importance of a bank: 1% for Raiffeisen Bank Aval, Alfa Bank (Ukraine), Ukrsotsbank, First Ukrainian International Bank, UkrSibbank, TAScombank, Universal Bank, OTP Bank, Pivdennyi bank and Kredobank.

The systemic importance buffer for Ukreximbank and Ukrgasbank should be 1.5%; and 2% for PrivatBank and Oschadbank.

In addition, these banks will have to develop a recovery plan in accordance with the requirements of the National Bank, which will contribute to the rapid stabilization of these institutions in a crisis.

After losing the status of systemic importance, the bank must adhere to the above requirements for another 12 months.

At the same time, this status in no way guarantees the banks special conditions for maintaining liquidity during periods of stress, as it will be provided under conditions common to the whole system.

Also, systemically important banks (except state-owned ones) cannot and should not expect to receive funds from the government for the purpose of capitalization.

As Ukrainian News Agency earlier reported, in compliance with the criteria in force since 2016, PrivatBank, Ukreximbank and Oschadbank have been declared systemically important institutions.

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