In accordance with the Law of Ukraine On Strengthening the Liability of Bank Related Parties and new requirements to the procedure for disclosure by banks of their ownership structures, on June 4, 2015, the Board of the National Bank of Ukraine passed Resolution No. 357 On Amendments to the Regulation on the procedure for registration and licensing of banks, establishment of stand-alone offices (hereinafter – Resolution No. 357).
This Resolution has streamlined the approaches taken by the National Bank of Ukraine in issuing approvals of acquisitions of a qualifying holding in a bank by legal entities and individuals, assessment of business reputation and financial standing of these entities.
Whether an acquirer of a qualifying holding in a bank has sufficient own funds will be assessed by comparing their value with that of the respective stake in the Bank's regulatory capital rather than the purchase value of the bank's shares.
The amendments have increased the requirements to business reputation of the bank’s qualifying shareholders and managers. Henceforth, an individual who has been either a bank senior executive or a qualifying shareholder in a bank that was declared insolvent, for instance, in connection with money laundering operations, will have a tarnished business reputation and will be unable to return to the banking industry in the capacity of a bank’s owner or a bank senior executive for 10 years.
The NBU Commission for Banks Regulation and Supervision has been authorized to establish whether there is a significant or decisive influence on the management or activities of the legal entity irrespective of the formal ownership of a qualifying holding, and determine whether the entity is a qualifying shareholder in a bank, regardless of whether or not such an entity has submitted a respective notification and documents to the National Bank for approval.
In addition, the amendments have tightened the requirements to the financial standing of investors of insolvent banks and modified the approval procedure by the National Bank.
In addition, Resolution No 357 has eased some approval procedures, inter alia, by repealing the requirement to undergo the nostrification procedure with regard to higher education diplomas issued by the EU higher educational institutions, and shortened the period for which an acquirer of a qualifying holding in a bank is required to submit financial statements. However, substantial exemptions from the regulatory requirements are established for international financial institutions, public companies and legal entities that are ranked as investment grade.
Therefore, the legal and regulatory framework for enhancing the transparency of the banking industry and strengthening the liability of the bank owners and related parties has been streamlined.