National Bank of Ukraine (NBU)
The central bank, the NBU, controls the banking system of Ukraine. The main function of the NBU is to ensure stability of the national currency, the hryvnia (UAH). The NBU is being supported by the International Monetary Fund (IMF) and has already cleared the sector of lenders with obscure ownership and also of banks involved in money laundering and other illegal operations. The number of banks operating in Ukraine declined from 180 in 2014 to just 100 by November 2016.
The NBU was also able to dramatically increase the transparency of the banking system. By November 2016 only four small-sized banks had failed to provide proper information about their beneficiary owners so far, compared to 27 percent in Spring 2014.
An official report in October 2016 for the 39 largest banks (accounting for 95 percent of the system assets), showed material capital shortages in 28 out of the largest 39 banks. This was largely due to the NBU increasing the minimum regulatory capital requirements for banks from UAH120 million to UAH500 million.
Since 2014 the banking sector in Ukraine has undergone substantial regulatory changes that has led to the multiple bank closures. The NBU has agreed three-year recapitalization plans, which also include measures to unwind the related parties from their lending portfolios. Ukrainian banks with related-party exposures in excess of prudential limits will be required to close by early 2019.
The largest banks are required to have a capital-adequacy ratio (CAR) of 5 percent of risk-weighted assets, and to achieve a ratio of maximum credit exposure to related parties compared with its regulatory capital of 25 percent by early 2019. In October the ratio was 28.19 percent, down from 45.56 percent eight months earlier.