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Contents

  1. Improvements to the procedure for supporting bank liquidity
  2. The procedure for obtaining credit, loans in foreign currency by resident entities from non-resident entities and for loans by resident entities in foreign currency to nonresident entities
  3. Special procedure for carrying out steps aimed at the financial rehabilitation of banks

1. Improvements to the procedure for supporting bank liquidity

Resolution of the board of the National Bank of Ukraine No. 262 of 30.04.2009 "On improvements to the procedure for supporting banks' liquidity"

Resolution of the board of the National Bank of Ukraine No. 262 of 30.04.2009 declared the following acts as invalid:

  • resolution of the board of the National Bank of Ukraine No. 459 of 25.12.2008 "On the approval of provisional regulations governing the granting of loans by the National Bank of Ukraine to support bank liquidity in the case of an actual threat to the banking system's sustainable operation";
  • resolution of the board of the National Bank of Ukraine No. 57 of 09.02.2009 "On the establishment of supplementary conditions (criteria) for the granting by the National Bank of Ukraine of refinancing loans for a term in excess of 14 days through a tender procedure; stabilisation loans; and loans to support bank liquidity in the case of an actual threat to the banking system's sustainable operation"; and
  • resolution of the board of the National Bank of Ukraine No. 88 of 25.02.2009 "On extension of the term of loans for bank refinancing" (as amended), and the Regulations for loan support provided by the National Bank of Ukraine to Ukrainian banks in the case of an actual threat to their operation were adopted, contemplating that:
  • the National Bank determines whether loans are to be granted to banks (which are in the process of a rehabilitation procedure), taking into account the category assigned to each specific bank in accordance with the quantitative and qualitative indicators set by the National Bank;
  • the decision of approval from the National Bank to grant a loan; or (where valid reasons exist) to extend the term of a loan; and/or to delay payment of the interest accrued on a loan; and/or to change the interest rate in a loan agreement is made by resolution of the board of the National Bank;
  • any loan may be granted to a bank for a term not exceeding one year, both in the form of a lump sum payment and by opening a loan facility;
  • the National Bank will only provide loans against some marketable security, including: Ukrainian state bonds, immovable property (capable of being used as pledged property (mortgaged property) provided no encumbrances over such property exist at the time of execution of the respective pledge (mortgage) agreements), property rights under loans determined as "standard", "under control" or "substandard" and granted to business entities and secured with a pledge (mortgage) over immovable property; in addition, the National Bank is entitled to request that banks provide shares/shareholdings as additional security.

Resolution No. 262 also approves the indicators on the basis of which the National Bank of Ukraine takes decisions to provide loans to banks in the case of an actual threat to their operation. In particular, the regulatory capital requirement for category I banks is over 8% and for category II banks – 4-8%; the requirement for return on assets for category I banks is over 0.5% and for category II banks – 0.04-0.5%; and the required ratio of NBU funds to total bank assets for category I banks is 0% and for category II banks – 0.001-10%.

The resolution became effective on 17.05.2009.

2. The procedure for obtaining credit, loans in foreign currency by resident entities from non-resident entities and for loans by resident entities in foreign currency to nonresident entities

Resolution of the board of the National Bank of Ukraine No. 265 of 30.04.2009 "On amendments to certain regulatory legal acts of the National Bank of Ukraine"

The resolution of the board of the National Bank of Ukraine No. 265 of 30.04.2009 made the amendments to Regulations on the procedure for obtaining credit, loans in foreign currency by resident entities from non-resident entities and for loans by resident entities in foreign currency to nonresident entities, as approved by resolution of the board of the National Bank of Ukraine No. 270 of 17.06.2004, in particular:

  • a resident entity receiving credit in a foreign currency granted by a Ukrainian bank must register the respective credit agreement with the NBU if the Ukrainian bank (being the initial lender) assigns its right of demand under such credit, and at the same time: (і) the agreement for assignment of the right of demand must contain provisions stipulating that the agreement for assignment of the right of demand comes into effect from the moment of registration of the credit agreement; and (іі) only upon registration of the credit agreement may payments be made between the resident borrower and non-resident entity under the credit agreement;
  • in connection with the above, the respective amendments were also made to the list of documents to be submitted to the NBU to register credit granted by a nonresident entity and to obtain a registration certificate;
  • it has been stated that the requirements regarding the mandatory obtaining by a resident entity of a personal licence issued by the NBU in order to make loans in a foreign currency to a nonresident entity shall not apply to activities: (і) carried out by Ukrainian banks with written authorisation from the NBU to carry out activities to attract and allocate foreign currency in international markets; or (іі) carried out by Ukrainian financial institutions possessing a general licence to carry out currency exchange transactions;
  • it has been stated that any Ukrainian bank deciding whether to issue a permit to a resident entity to service a loan in a foreign currency may request the resident entity to provide the necessary documents for the authorised bank to fulfill its duty as a currency exchange control agent for the transactions carried out by the resident entity.

The resolution of the board of the National Bank of Ukraine No. 265 of 30.04.2009 also introduced amendments to Regulations on the procedure and terms for the sale of foreign currency, as approved by resolution of the board of the National Bank of Ukraine No. 281 of 10.08.2005, stipulating that the requirements as to the term of deposit for funds in hryvnias on account type 2900 "Accounts payable in foreign currency, bullion and purchase and sale transactions in precious metals concluded for the benefit of bank customers" (so-called regime «Т+5») do not apply to the purchase of foreign currency in transactions in securities carried out by foreign investors, where such securities have a first rate listing on a Ukrainian stock exchange, except for transactions to purchase or sell securities conducted outside of such stock exchanges.

3. Special procedure for carrying out steps aimed at the financial rehabilitation of banks

Resolution of the board of the National Bank of Ukraine No. 225 of 16.04.2009 "On amendments to the Special procedure for measures aimed at the financial rehabilitation of banks"

Resolution of the board of the National Bank of Ukraine No. 225 of 16.04.2009 introduced amendments to the special procedure for measures aimed at the financial rehabilitation of banks, as approved by Resolution of the board of the National Bank of Ukraine No. 405 of 01.12.2008 and as approved in its restated version. The special procedure establishes, in particular:

  • the procedure for approval and adoption of a bank's financial rehabilitation plan;
  • the specifics and procedure for the increase of a bank's authorised capital using shareholders' (participants') and investors' funds;
  • the specifics of a bank's reorganisation by decision of its owners;
  • the specifics of the bank capitalisation procedure, with state participation;
  • that, in order to take measures under the plan for the financial rehabilitation of banks, the provisional administrator is entitled to decrease the amount of a bank's authorised capital, determine the new nominal value of its shares, consolidate shares, order an additional issue of shares, simultaneously decreasing the amount of a bank's authorised capital, consolidating its shares and alterations to its capitalisation require the approval of the National Bank of Ukraine;
  • the procedure for decreasing the authorised capital of a bank and for determination of the new nominal value of its shares; and
  • the measures for a bank's reorganisation in the course of a provisional administration.

The resolution became effective on 01.06.2009.

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