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Banks Have to Generate Share of Capital Conservation Buffer by Year’s End

4 April 2019

Press Release

 

The National Bank of Ukraine (NBU) reminds banks about the requirement to generate the capital conservation buffer of 0.625% until 1 January 2020. This is a mandatory buffer for each bank at the first stage of implementation of the capital conservation buffer, which starts in 2020.

 

Onwards, the capital buffer will gradually increase each year until it reaches 2.5% as of 1 January 2023.

 

Such buffer will ensure that banks have raised a capital surplus during a non-crisis period above the minimum required to absorb any possible losses, which may occur in times of overall economic downturn, without breaching the capital adequacy ratio in the future. This instrument will contribute to the targets of the NBU strategy for financial stability by enhancing banks’ loss absorbing capacity.

 

The same instruments are used for raising both the buffer and common equity. This means that, considering the requirements to raising the buffer, the common equity adequacy ratio (N3) as of the beginning of 2020 should account for at least 7.625%.

 

Please note that, according to the data as of 1 March 2019, all solvent banks have adequate capital to ensure compliance with the requirements to raising the capital conservation buffer of 0.625%.

 

As a side note, introduction of capital buffers was approved by NBU Board Resolution No. 312 On Approval of Amendments to the Instruction on the Procedure for Regulation of Bank Activities in Ukraine dated 12 May 2015.


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Last modification   04.04.2019