NBU approves transition requirements for banks under new capital structure
MOSCOW. June 11 (Interfax) - The National Bank of Ukraine (NBU) has updated minimum requirements for banks' capital adequacy according to a new, three-tier structure in light of the Financial Stability Council's approval of a strategy for the development of lending.
As of August 5, 2024, banks will have to comply with Common Equity Tier 1, Tier 1 and regulatory capital ratios of, respectively, 5.625%, 7.5% and 10%, Ukrainian media reported, citing a statement from the NBU.
The NBU believes the transition provisions will maintain the bank capital needed to cover risks and protect the interests of depositors. At the same time, banks' potential to increase their loan portfolios will increase by 50% compared to current reserves.
There will be a gradual schedule for reaching minimum capital adequacy ratios: at least 8.5% as of December 31, 2024, at least 9.25% as of June 30, 2025 and at least 10% as of July 1, 2025.
The NBU has granted banks the right to include profit for the first half and first nine months of 2024 in Common Equity Tier 1 capital without preliminary approval by the regulator and a report on interim financial results. However, the amount of profit must be reduced by the amount of dividends, and the time period for including profit in capital will be limited by the date of the annual shareholder meeting on 2024 results. Common Equity Tier 1 capital can also include funds received as payment for common shares or used to increase their par value.
The NBU has also introduced temporary particulars for assessing credit risk on specialized loans (project and object financing), and higher liquidity ratios for security in the form of equipment intended for use in the electricity sector. The list of exceptions from established prohibitions has been expanded, which will enable banks to conduct active operations with affiliated leasing companies that are part of the same banking group.
The Financial Stability Council on June 6 approved a strategy for the development of lending, the key objectives of which are to provide financial resources for the restoration of energy infrastructure and stimulate the credit demand of defense companies and the manufacturing and agriculture sectors.
The Finance Ministry said the strategy will help expand access to credit resources, develop entrepreneurship, raise investment, create new jobs and bring Ukrainians back from abroad.
The strategy also calls for more intense development of infrastructure for small and medium businesses, with the provision of retail factoring, finance leasing and supply chain financing, as well as the introduction of technological innovations in financial services to ease access to them and increase the efficiency of customer service.