The National Bank of Ukraine and market participants discussed issues related to business reputation assessment when deciding appointments of bank senior executives or approval of candidates for senior managerial positions. The meeting featured NBU First Deputy Governor Oleksandr Pysaruk, directors of the NBU’s relevant departments, representatives of the Independent Association of Ukrainian Banks (IAUB), the Association of Ukrainian Banks (AUB), the Ukrainian Credit Banking Union (UCBU), and various bankers.

During the discussion, bankers and representatives from banking industry associations underlined that they are unable to establish an independent body responsible for carrying out additional assessments of bankers' business reputations for the following reasons:

• the absence of documents required to make appropriate decisions due to restricted access to most documents;
• a lack of unbiased criteria required to make appropriate decisions; and
• bankers' reluctance to risk their reputation when making decisions in the absence of access to documentation.

However, the NBU is not authorized to provide information about selected bankers to any independent body established by the banking community as the disclosure of this information is subject to restrictions imposed by applicable laws.

“Therefore, following discussions with bankers, we have arrived at the conclusion that a business reputation assessment should rest with the NBU since the regulator has access to the findings of inspections and financial monitoring. In its turn, any banking association may issue an opinion confirming that a candidate has an irreproachable reputation despite some evidence to the contrary. Based on this opinion and its own sources of information, the NBU’s collegial body will draw a final conclusion as to whether or not a candidate has an unblemished business reputation,” said Mr Pysaruk.

According to Mr. Pysaruk, this will be the most appropriate and unbiased approach, which would enable it to start tackling the problem of assessing business reputation with due regard to special circumstances.

“The NBU and the Deposit Guarantee Fund (DGF) are in possession of information required to determine whether a banker is guilty or not guilty of allegations related to driving a bank into bankruptcy. Without access to such information, it would be irresponsible to decide who should and who should not secure a job” said Chairman of the IAUB’s Council Mr Roman Shpek. He emphasized that the NBU should take such decisions jointly with the DGF, whereas the issuance of an opinion will rest with banking associations.

As mentioned at the meeting, so far 800 individuals have been deprived of the opportunity to become banks' senior executives, of whom 620 individuals have been disqualified for three years and 180 individuals for 10 years. However, there is currently no alternative mechanism to evaluate the business reputation of an individual, which should take into account special circumstances or facts.