The National Bank of Ukraine has brought the regulatory framework for calculating open foreign currency position into conformity with generally accepted international standards.  To this end, on 1 December 2015, the NBU Board issued Resolution No. 847On Approval of the Methodology to be Applied by Authorized Banks when Calculating Open Foreign Exchange Position Limits (hereinafter – the Methodology).

Up until now, authorized banks calculated the total (long/short) open foreign currency position in accordance with NBU Board Resolution No. 182, dated 31 March 2014, On Bringing Limits of Open Foreign Currency Position of the Banking System of Ukraine in Line with International Standards(hereinafter – Resolution No. 182). Resolution No. 182 set out  a schedule to be followed by banks while including provisions in foreign currency against banks’ asset-related operations in the calculation of their foreign currency position.    As of 1 December 2015, banks already include 100% provisions of the total amount in the calculation of the total (long/short) open foreign currency position.

Additionally, Resolution No. 182 allowed banks not to sell the amount of foreign currency by which it had exceeded the required total long open FX position limit resulting from operations to increase regulatory capital. A bank was permitted to do so on the condition that it brings its total long open FX position to the required limit by restructuring debt liabilities denominated in borrowers’ foreign currency (through the replacement of the currency in which the liability is denominated).  A bank was obliged to submit the respective debt-restructuring plan to the NBU.

However, in view of the approval of the new Methodology enacted by Resolution No. 847, Resolution No. 182 can be abolished as unnecessary, and the respective provision has been included in Resolution No. 581. To this effect, the NBU Board issued Resolution No. 848 amending NBU Board Resolution No. 581, dated 3 September 2015.