The National Bank of Ukraine has addressed an open letter to the Chairman of the Verkhovna Rada of Ukraine, Mr Andrii Parubii, requesting to replace the Chairman of the Parliamentary Committee on Financial Policy and Banking, Mr Serhii Rybalko, citing his incompetence, political bias, inability to ensure the effective work of the Committee, attempts to undermine confidence in the credibility of the NBU and block the regulator’s efforts to rehabilitate the financial sector, and to put Ukraine back on the path to growth.

The letter also questions the make-up of the Committee as most of its members, with some rare exceptions, serve vested political and business interests. These members prevent the Committee from fulfilling its functions and responsibilities of promoting the development of the financial sector as a whole and protecting the interests of financial services consumers.

In view of the above, the NBU urges Parliament to replace the Chairman and appoint new, more professional, and less biased members to the Parliamentary Committee on Financial Policy and Banking.

An Open Letter from the National Bank of Ukraine Addressed to Parliament

The National Bank of Ukraine requests Parliament to replace the Chairman of the Parliamentary Committee on Financial Policy and Banking, Mr Serhii Rybalko, citing his incompetence, political bias, inability to ensure the effective work of the Committee, attempts to undermine confidence in the NBU and block the regulator’s efforts to rehabilitate the financial sector, and to put Ukraine back on the path to growth.

The Parliamentary Committee on Financial Policy and Banking is responsible for ensuring that parliament adopts draft laws on the rehabilitation and development of the banking system that pave the way for macrofinancial stability. Mr Rybalka, in his capacity as the Committee Chairman, proved unable to ensure the fulfillment by the Committee of its mandate.

A total of eleven draft laws, including those on the protection of creditor and financial services consumer rights, as well as draft laws designed to improve the financial services market regulation, are pending approval by parliament. The NBU believes that these draft laws are critical for the development of the financial sector and the economy as a whole. The Parliamentary Committee on Financial Policy and Banking plays a key role in the parliamentary approval process.

Only one draft law required for advancing financial sector reforms has been adopted by Parliament in a second reading in 2016, which points to the Committee's poor performance. The Law On Financial Restructuring is the only law that has been finalized by the Committee. Draft Law No. 4529 of 26 April 2016 On Amendments to Some Legal Acts of Ukraine designed to stimulate lending in Ukraine and other draft laws critical for the resumption of lending to the real economy have been pending approval by Parliament for more than six months.

Also, the Committee Chairman abuses his power to exert pressure on the authorities responsible for the rehabilitation of the banking sector, including on the Supervisory Board responsible for monitoring financial restructuring that aims to settle disputes between banks and enterprises over corporate insolvency and debt recovery problems and help bring enterprises back to solvency. In October 2016, Mr Rybalka, who is not a member of the Supervisory Board, has attempted twice to prevent its meetings from taking place.

The Committee Chairman has resorted to spreading blatant lies about the NBU’s activities. Mr Rybalka made unfounded accusations claiming that the NBU Governor and NBU representatives have deliberately skipped the Committee’s meetings. In fact, the NBU representatives have participated in 28 meetings held during the past 12 months. In particular, NBU Governor Ms Valeria Gontareva took part in two of these meetings, while the NBU Deputy Governors attended 17 meetings. It is worthy to note that in most cases (28 meetings) NBU representatives participated in the Committee’s meetings upon the initiative of the regulator. The NBU representatives have attended only eight meetings at the invitation of the Committee.

Such unfounded accusations hamper efforts to maintain effective cooperation between the Parliamentary Committee on Financial Policy and Banking and the NBU, which is required to move financial sector reforms forward. Furthermore, the undermining of confidence in the NBU’s credibility leads to the erosion of public confidence in the banking system and the domestic currency.

Mr Rybalka has repeatedly spread unfounded information and rumors about the activities of banks and the regulator. He has allegedly disclosed restricted information received from the NBU, which potentially can have adverse consequences for the banking sector.

All these facts point not only to Mr Rybalka’s deliberate attempts to block cooperation between parliament and the NBU, but also shows his irresponsible attitude towards his duties and his incompetence that constitutes unacceptable conduct by the Chairman of the Parliamentary Committee on Financial Policy and Banking, whose duty is to take care of financial sector stability and the welfare of the population.

We would like to draw your attention to the fact that such unprofessional performance by the Chairman of the Parliamentary Committee on Financial Policy and Banking raises questions among our international partners that support Ukraine on the financial sector reform path. The Chairman, who makes populist accusations instead of helping address the problems faced by the financial sector and contribute to the reform efforts, not only brings discredit on his Committee and the entire Parliament, but also undermines the country's international image.

The make-up of the Committee also raises questions as most of its members, with some rare exceptions, serve vested political and business interests. Among the committee members is Mr Leonid Klimov, the former owner of the insolvent IMEXBANK. Mr Klimov, who owes UAH 310 million under refinancing loans, is currently seeking a court decision to allow him not to repay his debt. Over UAH 3.4 billion in debt is owed by the Bank. Another Committee member, Mr Dzenzerskyi, is the owner of companies that have defaulted on debt service payments in the amount of UAH 9 billion.

Representing the interests of some insurance companies, one more Committee member, Mr Maksym Poliakov, seeks to radically revise the draft law on the split of functions performed by the National Commission for the State Regulation of Financial Services Markets between the NBU and the National Securities and Stock Market Commission (NSSMC) that is intended to establish effective supervision of the insurance services market. We refer here to Draft Law No.2413-а On Amendments to Certain Legal Acts of Ukraine on the Consolidation of the State Regulation of Financial Markets Functions, which was adopted by parliament in its first reading on 7 July 2016.

These members prevent the Committee from fulfilling its functions and responsibilities of promoting the development of the financial sector as a whole and protecting the interests of financial services consumers.

In view of the above, the NBU urges Parliament to replace the Chairman and appoint new, more professional, and less biased members to the Parliamentary Committee on Financial Policy and Banking.