By KYIV. Dec 22 (Interfax-Ukraine) – The National Bank of Ukraine (NBU) will update the country’s financial sector development strategy in order to safely end emergency measures in the financial sector and restore accounting and prudential norms, according to the Memorandum on Economic and Financial Policies of the IMF Program Monitoring with Board Involvement (PMB).
"In anticipation of a return to normality, we will update our financial sector strategy to safely unwind financial sector emergency measures and restore accounting and prudential norms. Our 2021 financial sector development strategy will be updated in consultation with IMF staff and serve as a living document requiring periodic review, modification, and action plans with implementation milestones. Inter alia, the strategy will include coordinated steps to safely unwind exceptional measures; diagnostics to identify bank re-capitalization needs and NPL resolution priorities; a framework to address any capital shortfalls; a prioritized action plan to monitor and tackle high NPL levels; well-developed contingency plans to respond to potential further shocks; and coordination arrangements among key stakeholders," the document says.
"In recognition of the importance of well-designed bank diagnostics to the success of the financial sector strategy, the NBU will prepare a Terms of Reference in consultation with IMF staff describing the methodology and processes of bank diagnostics necessary to assess bank capital adequacy and identify NPL resolution priorities (Structural Benchmark, end-January 2023)," the report says.
"The current prohibition on bank capital distributions will remain in place until these diagnostics have been completed. In line with our commitment to financial stability, the Financial Stability Council (FSC) will endorse by end-January 2023 a contingency plan in preparation for potential adverse rulings from the constitutional challenges against the DGF Law and the Bank Resolution Law (Law No. 590), and update the existing contingency plan, which was prepared at the onset of the last Stand-By Arrangement, in connection with litigation risks over failed banks," it reads.
