Amendments to Certain Regulatory Legal Acts of the National Bank of Ukraine
1. Essence of the Law:
The Resolution introduces amendments to two key regulations of the NBU: “On Determining by Ukrainian Banks the Amount of Credit Risk for Active Banking Operations” and “On the Organization of the Process of Managing Problem Assets in Ukrainian Banks.” The purpose of the amendments is to implement European standards of prudential requirements, improve the assessment of credit risks, and increase the efficiency of managing problem assets. The amendments are aimed at a more accurate determination of risks associated with active banking operations and improving the processes of managing problem assets.
2. Structure of the Law:
The Resolution consists of two main parts: amendments to Regulation No. 351 and amendments to Regulation No. 97. The amendments to Regulation No. 351 concern the determination by banks of the amount of credit risk for active banking operations, in particular, the criteria for determining default assets, calculating the probability of default (PD), assessing the timeliness of debt repayment, and adjusting the borrower’s class are clarified. The amendments to Regulation No. 97 are aimed at improving the organization of the process of managing problem assets, including the definition of non-performing assets, the role of units for managing problem assets, and debt settlement procedures.
3. Main Provisions of the Law:
The most important provisions are the amendments to the criteria for determining default assets, which affects the calculation of credit risk. Also important are the changes related to the assessment of the financial condition of borrowers, in particular, taking into account belonging to a group of related counterparties. In addition, changes in the management of problem assets, in particular, clarification of procedures for recognizing assets as non-performing and debt settlement, are important for banking activities.
