The National Bank of Ukraine (NBU) has updated the requirements for the capital structure of banks in accordance with the legislative changes specified by the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on Improving the Organization of Corporate Governance in Banks and Other Issues of the Functioning of the Banking System” (No. 1587-ИХ dated June 30, 2021), the NBU press service reports.
According to the new regulations, banks are required to implement a new (three-tier) capital structure from August 5, 2024.
The Regulation defines the procedure for calculating core Tier 1 capital, additional Tier 1 capital, Tier 2 capital and defines the requirements for their components. It also establishes the procedure and conditions for a bank to obtain permission or approval from the National Bank to include individual components in capital.
It is noted that the implementation of new requirements will be carried out in stages:
- by April 1, 2024, banks must develop internal regulations on determining the amount of regulatory capital;
- from April 1 to July 1, 2024, conduct test calculations and report their results to the NBU;
- from August 5, 2024, begin calculating regulatory capital in accordance with the new requirements.
It is noted that this step is part of the National Bank's efforts to approximate regulatory acts in the field of banking regulation to European Union standards. Compliance with the established requirements of capital should ensure its ability to effectively absorb losses arising from banking risks.
