Rada adopts “banking” law in first reading

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The adoption of a land market law in conjunction with the Banking Regulation Act will allow Ukraine to achieve a three-year IMF extended financing program

Photo: kiev-ity.com

Yesterday, March 30, Verkhovna Rada read an earlier law on the reform of certain banking regulation mechanisms Number 2571-D, Also known as “anti-Colombia”. The legislation was supported by 267 deputies with the required 226 votes.

First, the law guarantees the imperative of banks’ withdrawal from the market. If the court finds the NBU’s decision on the bank’s withdrawal from the market illegal, the bank’s bankruptcy or liquidation does not stop. The sale of property and settlements will continue with bank depositors and creditors. In fact, the law allows you to remove “white spots” in the law that previously allowed courts to re-establish “zombie” banks that were withdrawn from the market due to bankruptcy.

Secondly, the law changes the process of appealing the decisions of the National Bank and other state bodies in the process of withdrawing banks from the market. Courts should not replace the National Bank. They should be able to decide on validity, but should not question the discretionary powers of regulators and the calculations, assessments and conclusions made within their technical decisions.

Third, the law clearly defines the conditions and procedure required by former owners to receive compensation if the court finds the NBU’s decision invalid. In order for the compensation calculation process to be transparent and fair, an internationally recognized audit firm will play the main role in this case.

The law also improves the decision making process of the National Bank. Several rules regarding “professional judgment” and procedural rights are clarified. In particular, the law would make it possible to identify the problems of banks in the first stages, and therefore, to preserve their assets and withdraw from the market with minimal losses to banks.

In addition, the state now has more options on how to nationalize the banks, if necessary, to create a transitional bank that includes the transfer of equipment or liabilities and a bank receiving a share of the portfolio of assets. Thanks to this, the process will become much more efficient so that such a bank can start functioning almost immediately.

We also note that yesterday Verkhovna Rada also supported the bill on opening the second reading and the land market in Ukraine in general. 259 deputies voted for the decision.

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Earlier it was reported that Ukraine would receive a new three-year IMF EFF Extended Financing Program of around $ 8 billion by adopting the Land Market Law in conjunction with the Banking Regulation Act, as well as the macro- Financial assistance (World Bank loan) up to $ 1 billion).

READ ALSO: What the Ukrainian Economy Awaits: EBRD Scenario


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