The report includes data on the dynamics of deposits during the crisis period, interest rates on loans and deposits, and liquidity of the banking system.
The National Bank of Ukraine published the first review of the state of the banking sector for April 13–17. As noted on the regulator’s website, such reviews will be published weekly to follow the NBU’s principle of transparency, allowing bank customers, experts and market participants to know about the state of the sector under quarantine measures To get information quickly.
Such reports include data on the dynamics of deposits, interest rates on loans and deposits, liquidity of the banking system, as well as measures the National Bank has taken to support the financial system.
The first report from 13–17 April notes the following:
- At the time of the introduction of restrictive measures, there was an outflow of funds from investors’ accounts, but at a much lower pace than in 2008 and early 2014. At the same time, already in April, the decrease in foreign currency deposits, especially in fixed deposits, stopped due to the strengthening of the hryvnia and the steady supply of cash in banks
- The decrease in depositor activity slowed the decline in hryvnia deposit rate, which lasted from December 2019. Banks’ need for short-term liquidity has led to maturity rates at par: since the beginning of the year, rates on small deposits have fallen marginally compared to now
- Most large banks have adequate liquidity reserves and hryvnia keep deposit rates almost unchanged. The liquidity coverage ratio (LCR, refers to the bank’s ability to cover a client’s outflow for 30 days in a crisis) is nearly double the standard
Banks in Ukraine and NBU have taken steps to streamline the work of institutions under quarantine, as well as to mitigate immediate risks, including:
- Softened credit risk assessment requirements, allowing banks to restructure loans independently
- Organized, together with banks, the distribution of cash currency to the department, which helped to cope with the increasing demand for cash
- Disinfection process of hryvnia bank notes organized
- Suspended bank check
- Banks extend reporting deadline for NBU
- Suspended requirements for evaluation of collateral
- Suspended requirements for the implementation of capital buffers
- The introduction of some IT solutions for risk management systems and non-performing asset management processes, stress testing, SREP evaluation, has been postponed by many of the requirements that require the presence of bank employees, especially at workplaces.
According to the NBU Press Service, banks have already started restructuring loans for families and businesses who are suffering from the introduction of quarantine.
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Earlier, we wrote that the National Bank of Ukraine proposed the National Financial Services Commission to change the regulation of insurance companies for a period of quarantine to ensure their remote and uninterrupted operations. According to the regulator, the current regulation not only provides for the possibility of remote document management for many business processes of insurance companies, but also requires the personal presence of insurers and customers when signing documents.
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