The National Bank of Ukraine performs regulatory functions with regard to banks with Russian state capital as well as other banks in strict accordance with applicable laws and regulations that clearly set out the grounds for imposing restrictions and terminating the operation of banks in Ukraine.
Decisions to limit the share of Russian capital in Ukraine fall within the mandate of the Ukrainian parliament and the National Security and Defense Council of Ukraine. Ukrainian MPs can draft a bill offering their vision for the future of the banks with Russian state capital in the Ukrainian market.
Thus, MPs have a legal mandate to impose restrictions on the operation of banks with Russian capital in Ukraine, rather than require the NBU to overstep the boundaries of its statutory mandate. So far, the NBU has imposed all restrictions provided for by the decision of the National Security and Defense Council of Ukraine and the Presidential Decrees. Currently, the NBU has no grounds for terminating the operation of banks with Russian capital in Ukraine and must not break the laws.
Therefore, the argument that the NBU should terminate the operation of banks with Russian capital has no substance.
REBUTTAL of five false and misleading arguments regarding the banks with Russian capital that are presented in the reports circulated by media outlets
Argument 1. Aggressive expansion of banks with Russian state capital to the domestic market
FALSE
Over the past three years, the share of banks with Russian state capital in the domestic market has declined to 8.8%. These banks reduced the network of branches by 42%.
Over the past three years, domestic-currency household deposits more than halved, while those in foreign currency reported a four-fold reduction.
Argument 2. The banks with Russian state capital are granted refinancing loans on special (simplified) terms
FALSE
The NBU grants refinancing loans to all banks on equal terms. Refinancing is automatically provided to banks through standard liquidity management instruments. Refinancing loans are granted to banks against liquid collateral such as domestic government bonds or foreign currency. The schedule for liquidity-providing tenders is available on the NBU’s website at link. The NBU has not disbursed stabilization loans to banks since June 2015.
The banks with Russian state capital have no outstanding debt on stabilization loans granted by the NBU.
Argument 3. Banks with Russian state capital “sponsor” war in Ukraine
FALSE
The NBU emphasizes that in 2014 the NBU appointed an NBU overseer to each of the banks with Russian capital to closely monitor all transactions. If unauthorized transactions are detected, the regulator has all the instruments at its disposal to apply enforcement measures against these banks. So far, such violations have not been revealed.
Argument 4. PROMINVESTBANK PJSC has been recapitalized with public funds
FALSE
PROMINVESTBANK PJSC has been recapitalized only through equity injections made by the bank’s shareholders. We would like to underline that public funds can only be used to recapitalize state-owned banks.
Argument 5. There is an agreement between the senior management of the NBU and PROMINVESTBANK PJSC regarding settlements between Platinum Bank PJSC and PROMINVESTBANK PJSC
FALSE
Platinum Bank PJSC had no liabilities to PROMINVESTBANK PJSC in the mentioned period. Transactions involving the transfer of liquidity were not carried between these banks.
With regard to Platinum Bank PJSC, we would like to inform you that Platinum Bank PJSC was banned by the NBU from raising funds from state-owned enterprises while being classified as a problem bank. However, this bank raised funds in violation of the ban imposed by the regulator.
Also, the NBU barred Platinum Bank PJSC from raising deposits from customers above the set limits. The growth of the deposit portfolio was attributable to exchange rate revaluation and an increase in interest payments due on deposits that were not made.
Based on the results of the diagnostic studies of PLATINUM BANK PJSC conducted in H1 2016, the NBU approved the recapitalization program for this bank in June 2016, which identified capital needs faced by the bank. PLATINUM BANK PJSC submitted to the NBU a restructuring plan that contained a series of measures to raise additional capital. During 2016, the bank’s managers and qualifying shareholders took measures to implement the recapitalization program and address capital shortages. These measures included the repayment of related-party loans, the provision of financial assistance that is not subject to repayment by the bank’s shareholder and the posting of additional collateral. In 2016 alone, the bank’s shareholders injected a total of UAH 1 billion into the bank. However, as of 1 January 2017, the bank failed to meet the recapitalization requirements set by the NBU and ensure a sufficient level of regulatory capital, prompting the NBU to declare PLATINUM BANK PJSC insolvent.