Economy

banks

Rada simplifies bank restructuring procedure

1659

Ukraine's Verkhovna Rada, in the early hours of Monday morning, passed a bill on measures to facilitate the capitalization and restructuring of banks in Ukraine.

Bill No. 1564 was supported by 273 MPs, reported Interfax-Ukraine.

"We propose that the bill allowing quick injections of money in banks and the Individuals' Deposit Guarantee Fund be immediately passed. Under current laws, these procedures could last for months," Ukrainian Prime Minister Arseniy Yatseniuk said regarding the bill, while presenting it to parliament.

He explained that the devaluation of the hryvnia had undermined public confidence in the banking system, which is connected with Russian military aggression, and this has led to the situation where millions of Ukrainians had withdrawn money from banks as they believed they might collapse.

The government has already capitalized Oschadbank with the use of government domestic loan bonds worth UAH 11 billion, and is expected to capitalize another state-run bank – Ukreximbank – with UAH 5 billion.

"We foresee UAH 36 billion next year for the capitalization of the banks that meet the specified (in the bill) criteria and have been agreed with our international financial partners," Yatseniuk said. According to him, these are 'backbone banks' and banks that will become financially sustainable in the future.

The premier also added that UAH 20 billion more would be allocated from the state budget in 2015 to the Individuals' Deposit Guarantee Fund.

"We're aware this is not a final decision, and UAH 56 billion is unlikely to be enough to support everybody. But this is a very important step that will help shore up the banking system," he added.

He stressed that these actions would be carried out in public and would become a clear signal that the banking system would be able to live through a difficult year in 2015.

The press service of Parliamentary Finance Committee head Serhiy Rybalka said that the bill provides additional tools for the National Bank of Ukraine (NBU) to conduct monetary policy under crisis conditions in the financial and banking systems. At the same time, to avoid abuse by the NBU, the Council for Financial Stability, whose authority will be stipulated by a presidential order, will decide whether there are signs of an unstable situation in the banking system.

The bill also includes a provision to inform the public about the banks that receive NBU refinancing loans, about their amounts and types.

What is more, obligations of an insolvent bank with debts in foreign currency could be transferred to a transition (recipient) bank in the national currency, converted at an NBU official exchange rate as of the date when the Individuals' Deposit Guarantee funds launches the liquidation proceedings against said bank.

Comments (0)
In order to post comments, you must login.
Guest
advertisement
advertisement