On 29 March 2018, the National Bank of Ukraine (the “NBU”) adopted further amendments to its regulations to lift certain restrictions relating to the cross-border loans repayment, mandatory sale of foreign currency proceeds and payments under the individual NBU licences. The amendments removed temporary administrative constraints for banks and businesses in the capital market and will improve investment climate and business opportunities in Ukraine.

More options for an early repayment of the cross-border loans

Starting from 30 March 2018, Ukrainian borrowers are allowed to make early repayments under the cross-border loans that involve a foreign legal entity acting as a lender, surety, security or insurance provider, and whose shareholder is a foreign state or a foreign bank having the foreign state as a shareholder. The credit rating of such foreign state must be at least “A” as confirmed by one of the world leading rating agencies (Fitch Ratings, Standard & Poor's, Moody's).

More opportunities to conduct the foreign exchange transactions in the interbank market

According to the amendments, banks can conduct foreign currency sale and purchase transactions with UAH in the interbank market during the course of the day, disregarding the difference between purchased and sold amount of the foreign currencies and banking metals. Previously a mandatory rule envisaged that such difference should not be over 1% of the amount of the bank’s regulatory capital. The sanctions for the violation of the abovementioned rule were also lifted.

NBU commented that the new rule will provide for more active currency trade in the interbank market and more efficient currency liquidity.

Additional options to purchase and transfer abroad foreign currency under the individual licences of the NBU

Starting from 30 March 2018, resident debtors can also transfer funds abroad under the individual licences of the NBU in order to:

make payments to the competent foreign state authorities for the fulfilment of court decisions and decisions of the international commercial arbitration; and

make payments to the authorised bodies of the foreign state for the fulfilment of court decisions and decisions of the international commercial arbitration, reimbursement of judicial, execution and/or administrative fees, and costs of judicial and execution proceedings imposed on a debtor in accordance with the law of that foreign state.

The credit rating of such foreign state must be at least “A” as confirmed by one of the world leading rating agencies (Fitch Ratings, Standard & Poor's, Moody's).

New exemptions to the mandatory sale of the foreign currency proceeds rule

Ukrainian borrowers are no longer required to sell 50% of the foreign currency proceeds under a cross-border loan involving a foreign legal entity acting as a lender or surety, security or insurance provider whose shareholder is a foreign state with “A” category rate (confirmed by Fitch Ratings, Standard & Poor's, Moody's).

This amendment further extends the list of exemptions to the requirement of foreign currency proceeds mandatory sale that is to be in effect until 13 June 2018 (unless further extended).

Changes to foreign exchange position limits of banks

With effect from 01 May 2018, the limits of the total long open foreign exchange position of a bank will increase from 1% to 3%, while the limits of the total closed foreign exchange position of a bank will decrease to the level of up to 8%.

According to the NBU, changes to the limits on foreign exchange position will provide for more efficient currency risks distribution by the banks.

Legislation:

Resolution of the National Bank of Ukraine “On Introducing the Amendments to Certain Regulations of the National Bank of Ukraine” No. 31 dated 29 March 2018

Resolution of the Board of the National Bank of Ukraine “On establishing the limits of the open foreign exchange position” No. 184-рш dated 29 March 2018