On 11 July 2014, the Law “On Amending Certain Legislative Acts regarding Prevention (Minimisation) of Negative Impact on Stability of Banking System” No. 1586-VII dated 04 July 2014 (the “Law”) became effective. The Law aims to strengthen the banking system by extending the authority of the National Bank of Ukraine (the “NBU”), simplifying the procedures of bank capitalisation, increasing the minimum capital requirement for banks, and increasing the liability of a bank’s management.

Under the Law:

  • the minimum capital requirement for banks is increased from UAH 120 million (approximately EUR 7.5 million) to UAH 500 million (approximately EUR 30 million). The above applies to all newly-formed banks, while existing banks are granted a ten-year “transitional period”; 
  • the criteria used to determine whether a bank is in trouble or insolvent is extended to include banks whose non-performing assets account for 40 % of the total bank’s assets and those failing to settle depositors' or other creditors' claims within 5 business days from the due date;  
  • the liability of managers and owners of a significant interest in a bank is increased. In particular, the NBU is entitled to impose a fine of up to UAH 170 thousand (approximately EUR 10 thousand) if an owner of a significant interest in a troubled bank fails to provide it with financial aid; 
  • the NBU’s authority is expanded. In particular, if the total amount of deposits in the banking system decreases by 5% or more during 6 months, the NBU is entitled to simplify the procedures for share issues by banks, as well as the state registration of amendments to the banks’ charters and obtaining merger clearance from the Antimonopoly Committee of Ukraine.

Legislation: the Law of Ukraine “On Amendments to Certain Legislative Acts regarding Prevention (Minimisation) of Negative Impact on Stability of Banking System” No. 1586-VII dated 04 July 2014.