is your investment to the Victory and future of Ukraine

26.02.2021

On February 18, 2021, a regular meeting of the Financial Stability Council took place. The agenda of the meeting included several issues: implementation of the NPL reduction plans by state-owned banks, progress in the restructuring of the debt of the Deposit Guarantee Fund (hereinafter – the DGF), collecting compensation from the owners of bankrupt banks, distribution of guarantee system for credit unions and life insurance companies.

The risks in the financial sector significantly decreased in the second half of 2020

The financial sector has undergone the crisis with acceptable losses, most of the systemic risks are moderate now. Economic growth has recovered since the second half of 2020 due to the positive impulse from external markets, the growth of private consumption and state infrastructure projects. So, the reduction of the GDP in 2020 was not so deep, as predicted at the beginning of the crisis. The economy will continue to recover in 2021.

According to the results of 2020, the inflation reached the central point of the target range of   5% ± 1 pp, though it still continues to accelerate. The slowdown in inflation is expected in the second half of 2021. The further monetary policy of the National Bank of Ukraine will provide a balance between inflationary risks and economy support.

International currency reserves reached the eight-year maximum by the results of 2020, exceeding the equivalent of $ 29 billion. This level allows the National Bank of Ukraine to smoothen the imbalances in the foreign exchange market while adhering to the policy of flexible exchange rate. The funds of business and population in banks are growing, deposit and loan rates remain at historically low levels.

State-owned banks reduced the NPL portfolios by 22% in 2020

The share of non-performing loans at state-owned banks in 2020 decreased by 7 pp, from 64% at the beginning of the year to 57% on January 1, 2021. The volume of non-performing loans (NPL) decreased by 22%. This was facilitated by the normative regulation of work with the NPL by the Government and the National Bank. State-owned banks perform reduction plans on non-performing loans approved by the Financial Stability Council (hereinafter – the FSC). The main tool for the improvement of portfolios is the write-off of previously reserved non-performing assets – 30.6 billion for UAH portfolio and 3.1 billion for foreign currency loans.

Рада рекомендувала держбанкам продовжити роботу з оздоровлення

The Council recommended state-owned banks to continue working at improvement of loan portfolios in 2021 and actively use all the available tools for work with the NPL. The goal remains unchanged – it is to reduce the NPL share in the sector’s loan portfolio below 20% to 2025.

The focus is on the DGF debt restructuring and compensation of losses by owners of bankrupt banks

The FSC members confirmed the need for the implementation of the DGF debts to the state restructuring plan, approved in September 2020. The DGF debts restructuring is a necessary precondition for increasing the guaranteed amount of deposit refunds and expanding the scope of the deposit guarantee system. It is also one of Ukraine’s commitments in terms of cooperation with the International Monetary Fund.

The FSC also considered the issue of the Deposit Guarantee Fund working at returning the insolvent banks’ assets and noted the expediency of introducing mechanisms for voluntary settlement of insolvent banks’ debts by former owners. It requires to amend the existing legislation.

The concept of creating the guarantee system for credit unions and life insurance companies was approved

The FSC approved the concept of creating the deposit guarantee system for members of credit unions and guarantee payments under life insurance contracts on the basis of the DGF. The NBU and the DGF will suggest possible features of the guarantee system for the further discussion with market participants.

For reference

The meeting was attended by the members of the Financial Stability Council: the Minister of Finance of Ukraine Serhiy Marchenko, the Chairman of the National Bank of Ukraine Kyrylo Shevchenko, the Managing Director of the Deposit Guarantee Fund Svitlana Rekrut, the Chairman of the National Securities and Stock Market Commission Timur Khromaev, the First Deputy Chairman of the National Bank of Ukraine Kateryna Rozhkova, the Deputy Minister of Finance of Ukraine Yuriy Draganchuk.

The Financial Stability Council was created by the Decree of the President of Ukraine in March 2015.

The Council is a forum for professional discussion of systemic risks that threaten the financial stability of the state.

Форма звернення

Введіть адресу

Введіть назву організації

Введіть ПІБ

Введіть посаду

Фізична особа
Заява (клопотання)

Введіть email

Повідомити про корупцію

Введіть повідомлення

Зв'язатися з нами