National Bank of Ukraine

NBU has Completed the First Stage of Development of a Comprehensive System for the Identification and Monitoring of Operations of Banks' Related Parties
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23 January 2018

Press Release


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 banks. 


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 Monitoring Office.


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 the bank.



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