10 Jan 2024 10:02

NBU estimates Ukreximbank, Pravex, MTB Bank need capital injection of $262 mln

MOSCOW. Jan 10 (Interfax) - Ukraine's Ukreximbank, Pravex Bank and MTB Bank need to be recapitalized by a combined UAH 10 billion ($262 million at current rate), the National Bank of Ukraine (NBU) estimated after assessing their resilience for the next three years in the baseline macroeconomic scenario.

"This is how much these banks need to achieve the target capital adequacy ratios that guarantee their compliance with regulatory ratios over the forecast horizon," Ukrainian media reported, citing the NBU resilience assessment of the country's 20 largest banks.

The NBU found that 15 banks did not have problems with capital adequacy at the time of the assessment and two of the five banks that face higher required ratios - state-owned Sense Bank and Ukrgazbank - achieved capital adequacy ratios above the required level as of early December.

Following an asset quality review and verification of collateral taking into account adjustments, Ukreximbank's regulatory and core capital adequacy ratios were 5.93% and 2.98%, respectively, as of April 1, 2023, well below the required levels of 10% and 7%, NBU data showed. These figures were 7.71% and 6%, respectively, at MTB Bank, and 15.61% and 14.39% at Pravex.

However, at Pravex, capital would become negative in the second year of the baseline scenario and in the third year its capital adequacy ratio would drop to negative 16.51%, the NBU estimated. At MTB, capital would become negative in the first year and the capital adequacy ratio would drop to negative 4.15% in the third year, while at Ukreximbank the ratios would drop from negative 3.67% to negative 8.04% in the three years.

These banks must submit their restructuring or recapitalization programs to the NBU in the near future. The programs will contain measures to gradually attain the required ratios. The key measures the banks include in their programs are expected to cover balance sheet restructurings and operational efficiency improvements, the NBU said.

"These measures will reduce the banks' vulnerability, i.e. improve their risk profile. At the same time, the banks need to gradually bring their current capital adequacy ratios to the required levels by ramping up earnings and capital," the NBU said.

The official exchange rate was UAH 38.192/$1 on January 9.