n 13 February 2017, the Board of the National Bank of Ukraine issued Resolution No. 9 On Amendments to Some NBU Regulations amending the Instruction on the Procedure of Banking Regulation in Ukraine approved by NBU Board Resolution No. 368 of 28 August 2001 and NBU Board Resolution No. 806 of 19 November 2015 On the Incorporation of Credit Risk in the Calculation of Capital Ratios by Banks.

Amendments to Instruction No. 368 have:

• specified that banks shall define credit exposure in accordance with the Regulation for Measuring Credit Risk (NBU Board Resolution No. 351 of 30 June 2016) to recognize uncovered credit risk when calculating regulatory capital.  This regulation has replaced the Regulation on the Procedures of Making and Using Provisions Against Possible Losses on Bank Asset Operations by Banks of Ukraine (approved by NBU Board Resolution No.23 of 25 January 2012).
• loan loss provisions against asset operations of the 1st quality category have been excluded as a component of Tier 2 capital. Presently, banks make provisions against financial assets in accordance with International Financial Reporting Standards (IFRS).  Such provisions are made to recognize the impairment of financial assets and are not regarded as general provisions that could be included in the regulatory capital in line with the Basel standards.
• disregarded long-term liquidity gaps from the calculation of the regulatory capital adequacy ratio. The amount of asset-side transactions in which the maturities of liquidity-providing operations exceed the maturities of liquidity-absorbing operations (weighted on coefficient 50%) shall not be included in credit risk-weighted assets. This move is intended to clearly differentiate approaches to liquidity regulation and banks’ solvency.
• provided that a zero credit risk-weighted will be applied to all the assets under transactions with international financial institutions, such as the International Bank for Reconstruction and Development, European Bank for Reconstruction and Development and the International Finance Corporation, and used in the calculation of regulatory capital adequacy ratio;
• unified the rules governing the calculation of credit risk ratios (Н7, Н9) for specialized savings banks.

Resolution No. 9 comes into effect from 16 February 2017.