23 January 2018
In 2017, the National Bank of Ukraine completed the
diagnostics of banks asset operations with related parties, which crowned the
first stage of development of a comprehensive system for the identification and
monitoring of operations of banks' related parties.
“During 2016-2017, the regulator and banks conducted a
large-scale and scrupulous work on identification and analysis of the
operations of banks' related parties. This process was the first stage in the
development of a comprehensive program for the identification and monitoring of
RP operations, the implementation of which will allow to
offset the risks of banks financing the businesses of their owners and
other related parties in violation of the NBU regulatory requirements. And
this, in turn, will contribute to better stability of the Ukrainian banking
system”, said Kateryna Rozhkova,
Deputy Governor of the NBU.
Also, last year the NBU completed the
analysis of programs to reduce excessive indebtedness of related parties. These
programs were developed and submitted to the NBU by banks, in which, during the
diagnostics of 2016-2017, the regulator found violations of the requirements
for operations with related parties. At the beginning of last year, 44 out of
99 diagnosed institutions were identified as such
As of 1 January 2018, 22 banks continue to operate under
plans with individual schedules for bringing the maximum amount of credit risk
from RP operations in compliance with the regulator’s requirements.
Taking into account the experience of implementation by
individual banks of individual schedules and their suggestions, in 2017 the NBU
allowed banks to file a request for the extension of the validity of action
plans for up to two years. Bank can obtain such a right on condition that all
measures indicated in the plans are carried out in a
sound manner. In particular, the bank should decrease the amount of over-limit
RP indebtedness by 20% during the first year of the plan implementation.
One bank has already used this option, extending the
total term of the program from three to five years.
“In 2018, we plan to improve the process of integrated
monitoring of both asset and liability operations of banks with related
parties”, said Oleksii Rudyi, Head of Related Parties
Oleksii Rudyi also noted that
as of 6 January 2018, the amendments to the Law of Ukraine On
Banks and Banking entered into force, according to which the heads of a
bank’s standalone subdivisions shall not be treated as the bank's top managers.
If the bank makes appropriate changes to the list of related parties as to the
managers of the bank’s standalone subdivisions, the bank should also take into
account the absence of other grounds for identifying such parties as related to