Contents
- Anti-crisis measures
- The resources of the stabilization fund
- Measures concerning bank liquidity and currency transactions
- Approval of the procedures for state participation in the capitalization of banks
- Issues concerning regulation of reserve funds
1. Anti-crisis measures
The law of Ukraine dated 31.10.2008 No. 639-VI «Primary measures to mitigate the negative effects of the financial crisis and amendments to certain legal acts of Ukraine»
The law of Ukraine dated 31.10.2008 No. 639-VI «Primary measures to mitigate the negative effects of the financial crisis and amendments to particular legal acts of Ukraine» came into force on November 5, 2008.
The law provides for the following:
- the establishment of a stabilization fund from the state budget to ensure financial support for banks and businesses from: the unallocated proceeds of the privatization of state-owned property in 2008; the total proceeds of privatization in 2009; and the allotment of government securities;
- an increase in the value of the Individual Deposit Guarantee Fund;
- banks' methods of capitalization;
- a moratorium on the distribution of the net income (accrual, payment of dividends, repatriation) of banks subject to particular terms.
The law came into force from the moment of its official publication, save for the particular terms taking effect from January 1, 2009.
2. The resources of the stabilization fund
The decree of the Cabinet of Ministers of Ukraine dated 04.11.2008 No. 961 «Utilization of the resources of the stabilization fund»
The procedures for utilization of the stabilization fund's resources to provide loans for the purposes of clearing, refinancing and (or) loan servicing with respect to obligations assumed by national banking institutions and business entities from foreign creditors before September 15, 2008 have been approved by the decree of the Cabinet of Ministers of Ukraine dated November 4, 2008 No. 961 as amended by the decree of the Cabinet of Ministers of Ukraine dated November 10, 2008 No. 984.
3. Measures concerning bank liquidity and currency transactions
The resolution of the National Bank of Ukraine dated 05.12.2008 No. 413 «On certain aspects of banking activity»
The resolution of the Board of the National Bank dated 11.10.2008 No. 319 "Additional measures regarding banking activity in Ukraine" (as amended) was declared null and void by the resolution of the Board of the National Bank dated December 4, 2008 No. 413. This resolution also provides that banks must perform the following actions:
in the sphere of monetary market regulation and maintenance of bank liquidity:
- submit plans for increased capitalization to the Directorate of Banking Regulation and Supervision within ten days. Should a bank and its owners fail to increase its capital, they must discuss the issue of reorganization of the bank and make respective proposals to the National Bank of Ukraine.
- allocate not less than 50 per cent of the net income for 2008 to a reserve fund to cover unexpected losses.
- take measures to reduce administrative expenses by at least 10 per cent.
in the sphere of currency transactions:
- on a temporary basis, prohibit the purchase and exchange of foreign currency to make payments for the importing of products and services which do not enter Ukrainian territory and are instead resold to non-residents.
- should non-residents fail to perform their obligations under the import agreements, any foreign currency advances made by residents, which are subsequently returned for their benefit must be sold:
- at the purchase rate for the relevant currency – if the foreign currency advance has been bought on the Ukrainian interbank currency market;
- at the official exchange rate of the National Bank as at the transfer date of the funds outside Ukraine – if the advance was made with borrowed funds.
- on a temporary basis permit the purchase of foreign currency of an amount not exceeding the equivalent of UAH 75,000 per month on the Ukrainian interbank currency market as requested by resident and non-resident individuals (with a number of exceptions).
4. Approval of the procedures for state participation in the capitalization of banks
The decree of the Cabinet of Ministers of Ukraine dated 04.11.2008 No. 960 «Approval of the procedures for state participation in the capitalization of banks»
The decree of the Cabinet of Ministers of Ukraine dated 4 November, 2008. No. 960 provides for state participation in the capitalization of banks.
Under the decree, the National Bank establishes the criteria for state participation in the capitalization of banks, and will analyze the banks' financial activity. Based on the results thereof, it may: recommend to the stakeholders in the bank that they increase its authorized capital, in particular, with regard to funds from investors; appoint temporary administrators; and put forward a proposal to the Cabinet of Ministers regarding state participation in the capitalization of a bank.
The procedures provide that any decision on the capitalization of banks is to be made by the Cabinet of Ministers of Ukraine, as proposed by the National Bank, and the procedures formalize the terms of such capitalization.
5. Issues concerning regulation of reserve funds
The resolution of the National Bank of Ukraine dated 25.11.2008 No. 396 «Certain issues concerning regulation of the financial market»
On November 25 2008, the Board of the National Bank of Ukraine adopted resolution No. 396, which in particular establishes new standards for the creation of mandatory reserve funds by banks and reduces by 10 per cent the amount of mandatory reserves that must be kept daily in the respective bank's correspondent account at the National Bank of Ukraine, as of the beginning of the day of a transaction.
The resolution will take effect from December 5, 2008.
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Footnote
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