The National Bank of Ukraine (the NBU) has defined the procedure for risk-based off-site banking supervision. The amendments were made in accordance with the NBU’s strategic goal to ensure stable, transparent, and effective banking system with transition to the risk-based banking supervision.
Pursuant to the new procedure, the NBU will perform current monitoring of the financial standing of banks and will assess banks based on the risks inherent in banking and quality of the relevant risk management.
Moreover, the NBU has introduced a new instrument of off-site banking supervision – desk audits (off-site inspections) of banks – and defined the grounds and the procedure for their execution.
Desk audits of banks during off-site banking supervision are conducted with the aim to identify or confirm the following:
- evidence on how banks comply or incomply with the requirements of the banking laws, regulations, and rules set by the NBU, banking activity limitations, established economic ratios and open FX position limits
- credibility of a bank’s measurement of credit risk on its asset transactions, accounting and reporting of banking transactions, information on related parties and transactions with them submitted by the bank
- confirmation or rebutment of evidence of a bank’s risky activities that pose a threat to the interests of depositors or other creditors of the bank
Additionally, the NBU has set the procedure for introduction of a special regime of control and appointment of a bank curator set forth in Regulation On Applying Corrective Measures by the National Bank of Ukraine approved by NBU Board Resolution No. 346 dated 17 August 2012.
The respective provisions are stipulated by Regulation On the Off-Site Banking Supervision Conducted by the National Bank of Ukraine, approved by NBU Board Resolution No. 135 dated 6 December 2018. The Regulation was drafted taking into consideration European documents on supervision over credit organizations activity and as part of implementation of the Comprehensive Program of Ukrainian Financial Sector Development Until 2020.
NBU Board Resolution No. 135 dated 6 December 2018 will come into effect on 12 February 2019.