The Verkhovna Rada of Ukraine February 23 adopted in first reading bill No.6010 on simplification of procedures for the banks` capitalization and restructuring, according to an UNIAN news agency news agency correspondent.
While presenting the draft law, Head of the Parliamentary committee on finance and banking policy Serhiy Rybalka noted that the law would protect the interests of small and medium-sized banks, simplifying the procedure of their reorganization and recapitalization.
According to him, the law will also allow banks to give up their banking license without liquidation of the legal entity, which will ensure that the financial institution is able to continue operations in the non-banking financial sector, after fulfilling obligations to depositors.
”The inability to fulfill the sometimes draconian requirements of the National Bank should not lead to the banks` closing, expropriation of assets, and shifting their liabilities on the Individual Deposit Guarantee Fund, meaning every Ukrainian would have to pay,” said Rybalka.
He noted that his Committee with its decision of February 7 recommended that the Parliament adopt the draft law as a basis. However, in June, the next stage of recapitalization of banks will be completed. Therefore, Rybalka has called on the deputies to pass the bill as a basis and as a whole.
In turn, another representative of the Committee, MP Ruslan Demchak, pointed out that currently 54% of Ukraine`s banking system is concentrated in the hands of the state, another 35% is owned by foreign investors, while only 11% of banks have national private capital in them, but the investors have no resources for their capitalization.
”The essence of this project is to support at least 11% of the banks and help them. I beg you to listen to the professionals: this is not the National Bank, this is the market asking us, the deputies. Our committee supported this initiative almost unanimously,” said the deputy.
Memo. The National Bank in 2016 with its Decree No.58 ordered banks to increase their 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 to July 11, 2024.
According to the bankers` estimates, the implementation of the NBU requirements can become a daunting task for dozens of smaller financial institutions, and therefore the processes of mergers and liquidations will accelerate in Ukraine`s banking market.
In the course of the banking system purge in 2014-2016 and at the beginning of 2017, the National Bank of Ukraine withdrew from the market some 90 banks. 33 of those banks became insolvent in 2014, another 33 – in 2015, 21 – in 2016, and anoter three – in 2017.