Governor of the National Bank of Ukraine Stepan  Kubiv has participated in the meeting of the Verkhovna Rada of Ukraine Committee on Finance and Banking (hereinafter – the Committee).

A number of issues, including draft laws designed to stave off the adverse effects of the crisis on banking sector stability, measures to address the crisis' repercussions, and a moratorium on mortgage foreclosures for foreign currency loans secured by mortgage against residential property were high on the agenda.

The meeting was focused on discussing the draft law amending some laws of Ukraine designed to forestall (mitigate) the adverse impact on banking sector stability, which had been devised by the National Bank of Ukraine in collaboration with the World Bank and the Deposit Guarantee Fund (hereinafter – the Fund). The draft law aims to extend the mandate of the Fund to include additional responsibilities, which would enable the Fund to detect problems emerging in the banking sector in a timely fashion.

The Governor of the National Bank of Ukraine noted that if the draft law got passed, it would allow the Fund to reduce public funds required to wind down failed banks.

In the course of the Committee meeting, the participants explored possible ways to establish legal mechanisms to settle the problems faced by bank borrowers who had obtained foreign currency loans. The crisis that has triggered an increase in the exchange rate of the hryvnia against foreign currencies, specifically, the US dollar made it difficult for bank borrowers to service foreign currency loans. Given the fact that the vast majority of borrowers do not have sources of income in foreign currency, it is getting more and more difficult for them to meet their debt obligations.

Mr Stepan Kubiv informed the meeting participants that the National Bank of Ukraine, together with public institutions, banking associations and international financial institutions, had been exploring possible ways to tackle the problem.

A sharp rise in the official exchange rate is a problem that has affected all market players, including both borrowers and creditors.

Preliminary data show that the total number of mortgage loan agreements denominated in foreign currency is 87.1 thousand pieces, with outstanding debts thereon being worth UAH 46.4 billion. The number of agreements to provide mortgage loans denominated in foreign currency that are used for house purchase is 64.2 thousand pieces, with outstanding debts thereon being worth UAH 26.4 billion. The average value of these loans amounts to USD 45.5 thousand and USD 35 thousand respectively.

The meeting participants agreed to continue their efforts to devise legal mechanisms to address the problem related to outstanding foreign currency loans by setting up a Working Group composed of representatives from the National Bank of Ukraine, Cabinet of Ministers of Ukraine and people's deputies of Ukraine.

On June 3, 2014, the Verkhovna Rada of Ukraine passed the Law of Ukraine on a moratorium on mortgage foreclosures for foreign currency loans secured by mortgage against residential property.