The National Bank of Ukraine (NBU) says that 37 Ukrainian banks should increase their charter capital to at least UAH 200 million, or US$7.4 million, by July 11, 2017, according to the NBU`s website.
The newly adopted law on simplification of bank capitalization and reorganization, passed by the Verkhovna Rada on March 23, 2017, deals mainly with such banks, the NBU said.
At the same time, the regulator noted, all banking institutions in the country would be able to use the benefits of this law.
The NBU says banks now boost their capital now through additional contributions by shareholders, but with the adoption of the law, the banking sector may be consolidated through mergers.
In addition, the reorganization of banks will be possible under a simplified procedure whose term will be shortened from one and a half years to three or four months due to a significant acceleration of the timing of regulatory and corporate approvals, as well as a reduction in the number of required documents.
Moreover, the law allows banks to stop using a banking license without liquidating a legal entity and continue their operation as a non-banking financial institution. However, they must have no obligations to their depositors and other creditors.
As UNIAN reported, the Verkhovna Rada on March 23, 2017, adopted a law on simplification of procedures for bank capitalization and restructuring.
In 2016, the National Bank issued resolution No. 58 to oblige banks to raise capital to UAH 200 million by July 11, 2017; to UAH 300 million by July 11, 2018; to UAH 400 million by July 11, 2019; to UAH 450 million by July 11, 2020, and to UAH 500 million by July 11, 2024.
Compliance with the NBU requirements can become an impossible task for dozens of small financial institutions, and as a result, mergers and closures in the Ukrainian banking market will accelerate, according to bankers` estimates.
During a three-year banking purge campaign in Ukraine, 91 banks with four banks in 2017 alone have left the market.