On September 26, 2014, the National Bank of Ukraine hosted a meeting with more than 80 senior managers of the banks belonging to Group 3 and 4 banks. They had the opportunity to talk to the senior managers of the National Bank and come up with proposals to enhance the operational efficiency of the banking system in today's challenging conditions.
Governor of the National Bank of Ukraine Valeriia Gontareva started the discussion with macroeconomic overview and outlined the challenges facing Ukraine's economy. She emphasized that currency devaluation observed in Ukraine since the start of the year had occurred due to the accumulated macroeconomic imbalances, particularly, the fixed exchange rate regime that had been artificially maintained in 2010 – 2013. "We are only now moving closer to a fully-fledged inflation targeting regime, which, among other things, involves a flexible exchange rate regime. Thanks to efforts made by the Government and the National Bank with assistance from foreign creditors, primarily, the IMF, we have actively embarked on the adoption of inflation targeting regime. But for the aggravation of the situation in the counter-terrorist operation area in late August, we could have already seen the results of this work. In July, in particular, the balance of payments was virtually balanced, with the supply of foreign exchange exceeding the demand for it,” said Valeriia Gontareva.
Therefore, the focal point of the foreign exchange policy of the National Bank of Ukraine is to redress imbalances that occur in the economy due to the aggravation of the military conflict in the east of the country. "The measures taken by the National Bank of Ukraine to calm down the foreign exchange market are temporary. These measures are aimed at preventing businesses and the public from making rash, ill-considered decisions. We also hope to maintain a constructive dialogue with banks and receive support from them," said Valeriia Gontareva and urged banks to inform the National Bank about the need to adjust certain provisions of the legal framework that pose a threat to the stable operation of banks and their clients.
Director of General Monetary Policy Department Olena Shcherbakova reminded those present at the meeting that the National Bank of Ukraine takes note of the proposals put forward by market players. Thus, it has recently been brought to the notice of banks that a ban on settlements under imports transactions without physical delivery of the goods to the territory of Ukraine shall not apply to transactions involving payment for travel, transportation and communications services by residents provided that they hold relevant licenses (permits) and transactions involving payment for transportation services by resident shipping agents and some other transactions.
The Governor of the National Bank put a special emphasis on the need for the unconditional implementation of the legislation on prevention and counteraction to legalization (laundering) of the proceeds from crime, or terrorist financing. "There might be attempts by scrupulous banks to apply “shadow schemes” that were used by the banks declared insolvent due to their engagement in money laundering. Responsibility for ensuring adherence to the law rests on the managers of banks," she warned the senior managers of banks and urged them to pay due attention to financial monitoring issues. Valeriia Gontareva also reminded those present at the meeting about the need to disclose actual owners of qualifying holding of the bank, and said that these process should be finalized by the end of 2014.
At the meeting Director of General Department of Banking Supervision Alla Shulga informed the meeting participants that the diagnostic studies of banks belonging to Group 2 banks would have completed by end September 2014. Discussions are under way as to whether to carry out diagnostic studies of small and medium-sized banks.
The bankers requested that the regulator take the specifics of activities of small banks into account when holding foreign exchange auctions. They obtained a preliminary consent of the regulator that the minimum bid amount would be reduced from USD 500 to USD 100 thousand.
President of the Association of Ukrainian Banks Oleksandr Suhoniako noted: "When each bank acts on its own, they do not have a consolidated position”. Valeriia Gontareva called on those present at the meeting to formulate a consolidated position of the banking community and assured them that the central bank would pay due regard to it.
"The size of bank’s assets matters little to the National Bank of Ukraine, what matters most is the net capital, and transparent financial statements," the Governor of the National Bank said wrapping up the discussion.