The National Bank of Ukraine (NBU) has expanded opportunities for the authorized banks to make borrowings through the so called “synthetic loans” in domestic currency (loans actually in the hryvnia with all the payments between a creditor and a borrower made solely in the foreign currency).

Previously, Ukrainian banks could borrow using such loans only provided that a nonresident creditor is an international financial institution (IFI), of which Ukraine is a member, or IFIs to which Ukraine gives equal legal treatment granted to other IFIs or residents.

Now the NBU has allowed the authorized borrowing banks to take out “synthetic” loans in the hryvnia from any nonresident creditors, not only from IFIs. Cross-border transactions under such loan agreements will be conducted without registration or NBU’s individual licenses.

Banks will use the borrowed funds to provide lending in the hryvnia to Ukrainian borrowers and avoid the currency risk, which is to be borne by nonresident creditors of a Ukrainian bank.

The above provisions have been set out in NBU Board Resolution No. 12 On Foreign Currency Lending Transactions With Nonresidents Subject To Certain Terms of 15 February 2018. The amendments shall come into effect from 16 February 2018.