The National Bank of Ukraine has compiled the list of systemically important banks according to the revised methodology that allowed making the list much wider. More information on the new approaches to identifying systemically important banks is available here.
A systemically important bank is a a bank that, in case of bankruptcy or improper operation, could trigger systemic risks. The NBU pays special attention to operation of systemically important institutions, as potential problems in their operation may adversely impact the entire financial system.
As a reminder, PrivatBank, Oschadbank, and Ukreximbank have been recognized as systemically important since 2016.
In line with the revised methodology, the list has been extended to contain 14 systemically important banks:
- PrivatBank
- Oschadbank
- Ukreximbank
- Ukrgasbank
- Alfa-Bank
- Ukrsotsbank
- Raiffeisen Bank Aval
- First Ukrainian International Bank (FUIB)
- Ukrsibbank
- TAScombank
- Universal Bank
- KredoBank
- OTP Bank
- Pivdennyi Bank.
Becoming a systemically important bank is an additional burden for an institution, as such banks must meet stricter requirements to ensure their resilience.
First, effective 1 January 2020, systemically important banks must meet the following tightened ratio requirements:
- the quick liquidity ratio (N4) of no less than 30%
- the single counterparty maximum exposure (N7) of no more than 20%.
Second, starting from 1 January 2021, such banks will be required to have a systemic importance buffer in addition to the common equity adequacy ratio. The size of the buffer will depend on the bank’s level of systemic importance:
- 1% systemic importance buffer: Raiffeisen Bank Aval, Alfa-Bank, Ukrsotsbank, FUIB, Ukrsibbank, ТАS, Universal Bank, OTP Bank, Pivdennyi Bank, and KredoBank
- 1.5% systemic importance buffer: Ukreximbank and Ukrgasbank
- 2% systemic importance buffer: PrivatBank and Oschadbank.
Third, these banks must develop recovery plans in line with the NBU requirements, which will help quickly stabilize their operation in case of a crisis.
If a bank ceases to be a systemically important bank, it still has to meet the above requirements over the following 12 months.
At the same time, the status provides no guarantee of special liquidity support to systemically important banks during periods of stress. In addition, systemically important banks (except for state-owned banks) cannot and should not rely on capital increases at the expense of the government.
The list of banks was approved by the NBU Board decision No. 438-D On Identifying Systemically Important Banks dated 27 June 2019, which took effect on 1 July 2019.