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NSFR Required at 90% from 1 October 2021

NSFR Required at 90% from 1 October 2021

The prudential requirement on Net Stable Funding Ratio (NSFR) will be set at 90% for banks starting 1 October.

As a reminder, this requirement was adopted by NBU Board Resolution No. 158 dated 24 December 2019 and has been in effect since 1 April 2021.

Under EU standards and Basel guidelines, the NSFR for banks must be at least 100%.

Ukrainian banks have to reach this NSFR level gradually. The initial value of the ratio and the transition period for its implementation were defined in the timeframe approved by NBU Board Resolution No. 166 dated 22 December 2020. Under the NSFR implementation timeframe, the banks must comply with the required ratios, which will be at least:

  • 80% starting 1 April 2021
  • 90% starting 1 October 2021
  • 100% starting 1 April 2022.

NSFR calculations, which are conducted every ten days, show that as of 21 September 2021 the NSFR exceeded 90% at all banks, while 40% of financial institutions outperformed the 100% threshold by 1.5 times.

For reference

The NSFR sets the minimum required level of bank liquidity for a one-year horizon. It encourages banks to rely on more stable and long-term funding sources and reduce their dependence on short-term financing. This helps address maturity mismatch and mitigate a systemic risk to financial stability that is posed by banks’ reliance on short-term funding.

The introduction of the NSFR comes as another important step towards bringing Ukrainian banks’ liquidity ratios into line with EU legislation and Basel Committee recommendations.

The methodology for calculating the NSFR was approved by NBU Board decision No. 1001 dated 24 December 2019.

Banks must comply with the NSFR for all currencies and ensure that the NSFR calculation and monitoring are done separately in the domestic and foreign currencies.

 

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