On Feb. 3, 2014, the National Bank of Ukraine’s resolution No 33 dated Jan. 27, 2014 came into force, extending the suspension of restriction on size of refinancing loans for banks through March 1, 2014, the Information-Analytical Bulletin of the Cabinet of Ministers of Ukraine informs.
According to banking market analysts, by its resolution No 259 dated April 30, 2009, the NBU reinforced a requirement that value of refinancing (other than overnight loan) and direct REPO transactions, including application, shall not exceed 50% of the bank’s regulatory capital calculated to the balance on the last reporting date. This restriction means that NBU shall not assume the risks of a possible bank bankruptcy and inability to return the provided refinancing.
In general, this is a reasonable and quite justifiable restriction, believe the bank analysts. However, drastic political aggravations in the second half of November 2013 forced NBU to take the extraordinary steps.
On Dec. 4, 2013, the NBU Board approved Resolution No 491, according to which, restriction on value of refinancing for banks was suspended through Jan. 31, 2014.
The political situation in the country remains tense, and the NBU management extended the suspension of refinancing restriction through March 1, 2014. This is done in order to avoid reducing the bank’s ability to timely meet customer’s requests, note the IAUB analysts.
