Publications 2022-09-29T04:05:39+03:00
Ukrainian news
Personnel Changes Will Continue: What Awaits Board Of National Bank?

Personnel Changes Will Continue: What Awaits Board Of National Bank?

The new head of the National Bank of Ukraine is determined to completely replace the composition of the board. Several sources familiar with the position of Kyrylo Shevchenko has said this to Ukrainian News Agency. The next, already the second replacement of the NBU board member is scheduled for Wednesday, July 29. In total, there are three options for the development of events with the board of the National Bank. Two of them can be called radical, one - a compromise.

One of the first steps of Kyrylo Shevchenko as the Head of the National Bank was a change in the composition of the board. The former head of Ukrgasbank was appointed to the NBU on July 16, and after six days the NBU Council, on his recommendation, appointed Yurii Heletii as a Deputy Head of the regulator, instead of Oleh Churii, whose contract expired in early July.

However, according to the Ukrainian News Agency, the replacement of Churii with Heletii is only the first personnel decision on the composition of the NBU board. Literally in the coming days, it is planned to replace another deputy head of the National Bank. This may happen at an extraordinary meeting of the NBU Council on Wednesday, July 29, several sources told the agency.

According to the interlocutors of Ukrainian News Agency, Shevchenko is determined to replace all his deputies in the near future, but publicly he is quite careful in his comments on this topic. "On the team - I have clear criteria by which I work with the team. The first is professionalism, the second is professionalism, the third is professionalism," he said at a briefing after his appointment, answering a question about possible changes in the board. So it is not yet clear when the next changes in the board may take place.

The storm was avoided

The change of the head of the National Bank in some expert circles caused some concern. However, the negative expectations did not come true - the discount rate was frozen at 6% until the end of the year, there were no sharp fluctuations in the hryvnia exchange rate.

Besides, the Ministry of Finance managed to place Eurobonds for USD 2 billion a few days ago, even on slightly more favorable terms, when compared with the placement, which had to be cancelled on July 2 after Yakiv Smolii's statement about leaving the post of the NBU head due to political pressure.

Shevchenko, who is well known in international financial organizations from his work in the state-owned Ukrgasbank, managed to relieve the tension of international partners by negotiating with creditors, in particular, with the IMF. As confirmed to the agency by several interlocutors familiar with their results, the parties were satisfied with the mutual communication. The new head of the National Bank also confirmed that he would not allow an uncontrolled emission of the hryvnia.

But if the storm has been avoided now, it cannot be ruled out that the grounds for it may appear again - if the entire board is replaced.

Three scenarios, one of which is unlikely

In general, there are three scenarios to consider in terms of the governance situation - two can be called radical and one a compromise.

The first one is radical. After the replacement of Churii, all the other deputies: Kateryna Rozhkova, Dmytro Solohub, Serhii Kholod and Roman Borysenko will remain in their posts at least until the end of the year, at the most until the end of contracts. Earlier than all of these four, the contract ends for Solohub - in April 2021. This option is supported by some representatives in the government and in the expert area, who fear changes in the National Bank's policy after Smolii’s resignation. But if we consider that Shevchenko wants to replace the entire composition of the board, then this option can be called unlikely.

The second on is radical. The essence of the option is that all deputy heads of the board will change in the near future. A large share of the likelihood today of just such an option was confirmed to the agency by several sources. An additional confirmation can be the recommendation of the NBU Council dated July 22 to the head of the National Bank Shevchenko "to decide on the deputy heads of the NBU, who are appointed by the NBU Council for the period of office of the NBU head." The head of the regulator's council Bohdan Danylyshyn wrote about this on Facebook.

According to the agency, this recommendation was previously agreed with Shevchenko. Thus, the head of the NBU enlisted the support of the council in case of filing a submission for the dismissal of board members. But this option can be controversial from the point of view of legality.

In the law on the NBU, the procedure for dismissing the deputy heads of the regulator is not spelled out very clearly. They are appointed for a term "which corresponds to the term of office of the head of the NBU."

But the head of the NBU is appointed to the post for seven years. If he is dismissed early, as happened with Smolii, then is the end of the term considered a condition for the dismissal of deputies in this case? This is a controversial issue, but according to the agency, it is on the basis of this interpretation of the law that the replacement of board members can be carried out. "The head of the National Bank has been dismissed, that is, his term of office is over. Accordingly, deputies can be dismissed. This option is realistic. If they (the dismissed - ed.) consider that it is illegal, they can challenge the decision in court," said the interlocutor of the agency, familiar with the situation.

Besides, there are certain conditions under which the deputy heads of the National Bank can be dismissed - this is a resignation notice, the loss of an impeccable business reputation, after the entry into force of a guilty verdict, the beginning of party activities, etc.

That is, if there are no separate conditions for dismissal, then in this case the deputies can be discharged on the basis that the powers of the head of the NBU were terminated at the time of his early dismissal. Then the new head of the NBU will be able to select new deputies in accordance with their requirements for their professional level.

The list of candidates whom Shevchenko is considering for appointment to the board has not yet been clarified, however, according to unofficial information, when all deputies are changed, one of the members of the NBU council can move to the board. True, in this case it cannot be ruled out that the areas of responsibility of the deputies may be somewhat revised.

The desire to create one’s own team that one can fully trust is quite logical, but this option is quite controversial from a legal point of view and may raise new questions from international partners. "This is a rather risky step. If you know that the norm is controversial, but you apply it, then in fact it can be considered raiding. As a result, the program with the IMF is automatically lost, followed by the European Commission, the World Bank, the EBRD. This is a cataclysm, implementation which I would not like to receive," said the interlocutor of the edition, who is deeply in the context of the situation.

The third one is a compromise. The essence of the third option, which can be called a compromise, lies in the fact that another member of the board is replaced and the personnel changes stop there. According to the agency, on July 29, at an extraordinary meeting of the NBU Council, it is planned to dismiss the Deputy Head of the NBU, Roman Borysenko, who is responsible for the financial and administrative block of the National Bank. The motive for dismissal is not yet known exactly. However, according to the agency, the NBU has been investigating the administrative costs of the National Bank in 2019 for more than six months. “There are questions that Borysenko (during the investigation - ed.) cannot answer,” an interlocutor who is familiar with the process told the agency. He also noted that the IMF is aware of this investigation.

If, after replacing Borysenko, they put an end to the personnel issue, then the alignment in the board will become 50/50 in favor of Shevchenko, since with an equal division of votes he has a decisive vote. So the new chapter will be able to fulfill all promises on exchange rate policy and lending to the economy, and on cleaning up the banking system and reforming corporate governance of banks without any problems.