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NBU Approves Terms of Reference for Resilience Assessment of Banks in Wartime

NBU Approves Terms of Reference for Resilience Assessment of Banks in Wartime

The National Bank of Ukraine has approved the Terms of Reference for Assessing the Resilience of Banks and the Banking System of Ukraine in 2023 (Terms of Reference).

Please be reminded that the NBU's resilience assessment will be conducted in three stages: reviewing the quality of a bank's assets (loans to legal entities and individuals), extrapolating findings to all lending operations of the bank (as necessary), and assessing the bank's performance indicators under the baseline scenario along with determining the required capital adequacy ratios.

The approved Terms of Reference set out the approaches to asset quality review, valuation of property that the bank took as collateral, forms of reports and working documents for said review and further stages of the resilience assessment, rules for loan sampling, and (as necessary) the extrapolation from findings of the asset quality review to loans outside the sample.

The review of the property valuation involves obtaining the expert opinion of the State Property Fund of Ukraine (as necessary), the cooperation with which will be based on a concluded memorandum.

In accordance with the approved Terms of Reference, the first stage of the assessment is to be completed by 1 October 2023 through unscheduled inspections. For the third stage, the assessment will be complemented with the assessment model for bank indicators under the baseline macroeconomic scenario and its parameters.

The Terms of Reference for resilience assessment was approved by NBU Board Decision No. 189 dated 16 May 2023, which came into effect upon its approval.

For reference

To evaluate the actual state of the banking sector, the NBU is launching a resilience assessment of the banks and the banking system. In 2023, assessment will cover 20 banks that jointly account for over 90% of the banking system's assets. Assessment findings will be made public until 31 March 2024.

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