The National Bank of Ukraine (the NBU) supports the decision of the Verkhovna Rada of Ukraine to reduce the requirement for the minimum authorized capital of banks from UAH 500 million to UAH 200 million. The respective draft law No. 3329-д, initiated by the NBU, was voted by 333 members of parliament.
At the same time, the NBU gained the right to establish for some banks and legal entities, intending to engage in banking, a differentiated minimum size of the authorized capital but no less than UAH 200 million.
Law in force required banks to gradually increase their authorized capital to UAH 500 million by 11 July 2024. In November 2019, the NBU decided to move the deadline from 11 July 2020 to 1 January 2021 for banks to increase their authorized and regulatory capital from UAH 200 million to UAH 300 million. The NBU will amend the respective regulations to bring them in line with the adopted law.
“Today the banking system is adequately capitalized. Banks exceeded the required level (10%) of the regulatory capital adequacy ratio N2 reaching 19.29% as of 1 April 2020. Therefore, banks have no significant need to increase the minimum level of the authorized capital. The NBU carries on the comprehensive transition to the risk-based supervision and has enough powers to be flexible in responding to problems in specific institutions,” noted Kateryna Rozhkova, First Deputy Governor of the NBU. “Moreover, it is another step forward to outreach banks during the crisis period. Apart from that, the NBU had earlier postponed the requirement for banks to have capital conservation buffers and systemic importance buffers,” she added.
The NBU also supports the parliament’s decision to extend the law On Simplifying Bank Reorganization and Capitalization Procedures from 1 August 2020 to 1 August 2024. The law allows banks to do the following:
- to carry out takeovers under the simplified procedure that lasts three-four months on average (4 banks have already used this facility)
- to use the simplified procedure for capitalization that can be carried out within a considerably shorter timeframe (15 banks have already used this facility)
- to cease banking on their own initiative without winding up of a legal entity (7 banks have already used this procedure).
“The simplified reorganization and capitalization procedure for banks has proved its effectiveness over the last three years. Many banks have already applied the simplified facilities, and we are confident that these procedures will be used again. In addition, the law allows banks to give up their banking licenses voluntarily without liquidation after settling debts with depositors. This procedure reduces the number of bankruptcies in the market and gives bank owners the option to leave the market in a civilized way if they are unable to keep their bank on track. We expect consolidation of the banking sector to go on with more processes of merger and takeover,” said Oleksandr Bevz, Director of the Licensing Department.