Facebook Pixel

More rights to the NBU and tight control over banks: the Rada passed a law essential for the IMF tranche

Rada enlarged the powers of the NBU to cooperate with the IMF. Photo: UNIAN

Rada enlarged the powers of the NBU to cooperate with the IMF. Photo: UNIAN

The Verkhovna Rada adopted a law on banking that is essential for obtaining the second IMF tranche. 279 people's deputies casted their votes in favour of the bill "On Amendments to Certain Legislative Acts of Ukraine on Improving the Organization of Corporate Governance in Banks and Other Issues of the Functioning of the Banking System" No. 4367.

The main goal of the law is to improve corporate governance in banks. In particular, it is about strengthening the responsibility of the bank's Council and Executive Board, the system of internal control and risk management.

The "banking" law is essential for revising the "stand by" program and obtaining the second tranche of the International Monetary Fund (IMF).

The law imposes a new capital structure, including capital buffers. It will strengthen the bank's ability to absorb losses. The law also imposes additional requirements for members of the bank's Council and Executive Board, including their collective legal capacity.

The law imposes international monitoring instruments. In particular, the right of the regulator to demand changes in the personal composition of the bank's Council and Executive Board if the current composition of these bodies is not capable of ensuring effective management. The regulator can also establish an individual amount of economic standards for the bank, depending on the riskiness of its activities.

Context. Ukraine has undertaken to amend the law on banking. The changes were initiated as part of an 18-month "stand by" financing program and prepared jointly with the IMF and the World Bank.

At a meeting on June 17, the Parliamentary Committee on Finance, Tax and Customs Policy recommended adoption in the second reading and in general the "banking" bill. However, the NBU considered establishing an additional position of the Deputy Governor of the NBU for the non-banking financial sector inappropriate. The creation of an additional position was approved during the bill discussion. According to the Deputy Governor of the NBU Dmytro Solohub, the NBU has already been regulating the non-bank financial market for almost 12 months, and everything is working very well.

Comments

All News