National Bank of Ukraine Identifies Three Banks as Systemically Important Institutions

The NBU’s Committee on Banking Regulation and Supervision and Oversight of Payment Systems (hereinafter the Committee) has identified Privatbank PJSC, Oschadbank JSC and Ukreximbank JSC as as systemically important financial institutions (SIFIs). On 16 February 2016, the Committee   issued Decision No. 16 to this effect.

To classify a bank as systemically important, the NBU defines the indicator of bank’s systemic importance.  A bank is identified as systemically important if the indicator is higher than the average systemic importance indicator.

The following indicators are used to identify banks as systemically important:

Total assets (weighting ratio stands at 35%);

Amounts due to natural persons, business entities and nonbank financial institutions (ratio stands at 35%);

Amounts due from other banks (ratio stands at 7.5%);

Amounts due to banks (ratio stands at 7.5%);

Loans granted to business entities for industry, agriculture and construction (ratio stands at 7.5%);

The NBU pays special attention to such banks given their significant influence the country's financial stability. Beginning 1 January 2019, a systemically important bank is obliged to comply with special prudential ratios. In particular,

- Instant liquidity ratio limit (Н4), not less than 30%);

- Single counterparty credit risk ratio (H7), not more than 20%.

Beginning 1 January 2020, a systemically important bank is required to maintain a systemic importance buffer, an extra buffer requirement for banks designated as systemically important, which is calculated as percentage of its risk-weighted assets as mandated by the Instruction on the Procedure of Banking Regulation in Ukraine.

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