Net sales of dollars by the National Bank of Ukraine (NBU) last week fell to $789.3 million from $891.8 million in the last week of last year, data on the regulator’s website showed on Friday. In the first half of the week, for which the central bank has already published the data, the purchase of currency by bank clients was growing: from a minimum of $56.52 million on Monday to $202.69 million on Wednesday.
As a result, the NBU on Wednesday weakened the official hryvnia exchange rate by 0.08%, or 3 kopecks, to a new low of UAH 38.1159/$1.
Nevertheless, on Thursday the demand weakened slightly, as a result the exchange rate strengthened by 0.20%, or by 7 kopecks, to 38.0412 UAH/$1, and on Friday, the last day of trading, the hryvnia weakened again slightly – by 0.10%, or by 3 kopecks, to 38.0775 UAH/$.
Overall, since Monday, the dollar has appreciated by 0.20%, and since the National Bank’s transition to the regime of managed flexibility on October 3, 2023, the dollar has become more expensive by 4.13%, or 1 UAH 51 kopecks. A pronounced trend towards weakening of the national currency began on November 26 last year, and since then the hryvnia has devalued by 5.73%.
In the cash market on Friday, the dollar rose by 1% to UAH 39.49/$1, returning to the pre-New Year dynamics after a rebound in the first days of the year.
Overall, the NBU’s net sales in December rose to about $3.57 billion from $2.46 billion in November, $3.34 billion in October and $2.69 billion in September. Last month, the Finance Ministry raised $5 billion in external financing, which boosted international reserves by 4.4% in December to $40 billion 507.9 million, the second highest in history after July 2023.
The National Bank of Ukraine (NBU) in December fined five banks – Oxy Bank, Accordbank, Universal Bank (mono), MTB Bank and Cominbank – for a total amount of over UAH 66.74 million, the regulator said on its website on Friday.
The largest fine of UAH 20.05 million was imposed on Oxy Bank for improper verification of clients and their financial transactions, violations of financial monitoring, currency control and the bank’s obligation to use a risk-oriented approach in its activities.
According to the release, Accordbank has to pay UAH 18.84 mln for improper risk management system and check of the payer for transfer of funds, submission of unreliable information by the bank to the regulator, as well as for violations in the sphere of currency legislation.
Universal Bank was fined UAH 10.45 mln for improper customer verification, online monitoring and application of risk-oriented approach.
Similar reasons caused almost the same fine – UAH 10.40 mln – to MTB Bank.
The National Bank also fined Cominbank UAH 10m due to its late and incomplete submission of documents to the regulator regarding the bank’s compliance with the legislation on preventing money laundering.
Accordbank, COMINBANK, NATIONAL BANK OF UKRAINE, Oxy Bank, МТБ Банк, Універсал Банк (mono)
The National Bank of Ukraine has updated the requirements for the capital structure of banks in accordance with the norms of the law adopted in June 2021 on improving the organization of corporate governance in banks and other issues of functioning of the banking system (No. 1587-IX), which determine the introduction of a new (three-tier) capital structure for banks from August 5, 2024.
“The new requirements are expected to be introduced in stages: by April 1, banks must develop internal regulations for determining the amount of regulatory capital; from April 1 to July 1 – to conduct test calculations and report their results to the NBU; from August 5, 2024 – to begin the implementation of the calculation of regulatory capital according to the new requirements,” the regulator said in a release on its website.
It is indicated that the regulation on the procedure for determining the amount of regulatory capital by banks of Ukraine determines: the procedure for calculating the basic capital of I level, additional capital of I level, capital of II level, their components and deductions from them; requirements for the components of capital, at the expense of which the capital is formed; procedure and conditions for obtaining by the bank of the permission / approval of the National Bank regarding the inclusion of individual components in the capital, etc.
The National Bank emphasized that the introduction of the new capital structure is another significant step towards the standards of the European Union.
“The introduction of the new capital structure for banks is a significant step to improve the stability of the banking system and its competitiveness. Taking into account the results of the stability assessment, the current state of banks and the phased introduction of new requirements, we are confident that banks will cope with this task,” the release quotes First Deputy Head of the NBU Ekaterina Rozhkova as saying.
It is specified that the regulation on the procedure for determining the size of regulatory capital by banks of Ukraine was approved by the resolution of the Board of the National Bank of December 28, 2023 № 196, which comes into force on December 30, 2023.
The National Bank of Ukraine (NBU) on Thursday, the penultimate day of trading, weakened the official hryvnia exchange rate by 0.96%, or 36 kopecks, to a new low of 37.98 UAH/$1. According to the NBU rules, this rate will be valid for the remaining days of the year – December 29-31.
The reference value of the hryvnia exchange rate set by the National Bank at 12:00 p.m. on Thursday also decreased by 1%, or 39 kopecks, to 37.9404 UAH/$1.
According to market participants, trading on Thursday was active from the very morning: in the first hour and a half their volume amounted to about $150 million, and transactions even before noon were concluded at the rate of 37.97-37.99 UAH/$1, with offers at the rate of 38.03 UAH/$1.
According to the calculations of the ex-head of the analytical department of Sense Bank Alexey Blinov, the average official rate at the end of 2023 was 36.57 UAH/$1, which is almost identical to the fixed rate, which was in effect for 14 months until October 3 of this year.
The expert specified that the official year-end closing rate for the euro is 42.21 UAH/EUR1.
On the cash market on Thursday, the dollar exchange rate rose even more – by about 45 kopecks, to 38.72 UAH/$1.
The weakening of the hryvnia in recent weeks, the National Bank attributes to the seasonal increase in demand for foreign currency.
As reported, the National Bank’s net sales in November fell to $2.46 bln from $3.34 bln in October and $2.69 bln in September. However, the reduction of external financing to $2.04 billion led to a decrease in international reserves for the fourth consecutive month – by 0.5%, or $187.8 million – to $38 billion 785.2 million.
Profit of state-owned Ukrgasbank (Kiev) for January-November 2023 amounted to UAH 4.08 billion, while the same period last year the state bank ended with a net loss of UAH 3.75 billion, the financial institution reported on Tuesday.
It is specified that the operating profit of the bank for January-November this year before deductions to reserves and taxation amounted to UAH 4.3 billion.
According to the release, Ukrgasbank’s assets increased by UAH 35 billion since the beginning of the year and reached UAH 166.7 billion by the end of November 2023, while the portfolio of attracted customer funds increased by UAH 29.9 billion since January and amounted to UAH 142.7 billion.
It is specified that the most significant increase in the portfolio of funds of corporate business – by UAH 26.2 billion, up to UAH 85.5 billion, in particular, from small and medium-sized enterprises (SME) – by UAH 4 billion, up to UAH 25.4 billion.
The bank added that the portfolio of retail customers’ term funds in hryvnia amounted to UAH 9.8 billion at the end of November, having increased by UAH 3.5 billion since the beginning of the year.
According to the National Bank of Ukraine, as of October 1, 2023, Ukrgasbank ranked 5th in terms of total assets (UAH 166.44 billion) among 63 banks operating in the country.
The National Bank of Ukraine (NBU) together with international partners, in particular the World Bank and the European Bank for Reconstruction and Development (EBRD), are preparing a new mechanism for settling military risks, which they plan to present no later than the first quarter of 2024.
As noted on the NBU Facebook page, during the meeting of the regulator’s management with participants of the insurance market, the head of the National Bank Andriy Pyshnyy emphasized the importance of the introduction of insurance of political-military risks, which should be fully operational next year.
It was also noted that one of the priorities of the National Bank in 2024 is the development of a competitive, adaptive and cost-effective insurance market.
“New requirements for insurance companies bring us closer to European standards of regulation and supervision. Therefore, the implementation of new norms is a priority, and integration into the European community is task No. 1. We will have to move as fast as possible, but you can count on comprehensive support and mature constructive dialog,” Pyshny said, speaking about the importance of such changes for domestic insurance.
It was noted that in 2024, in particular, will begin the application of risk-oriented prudential supervision and improvement of requirements for the solvency of insurers, as well as a new type of supervision of market behavior of insurers to control compliance with the rules and standards of financial services.
“The National Bank is strengthening its staff with specialists who will evaluate insurers’ business models using a risk-based approach. Special attention will be paid to the assessment of insurers’ assets – property and securities, the value of which should be market-based,” Deputy Head of the NBU Dmytro Oleinik said during the meeting.
Separately, emphasis was placed on the importance of the work of financial monitoring units of insurers as a safeguard to attract companies to money laundering schemes, in particular for the purpose of tax evasion, and to limit ties with Russia.
At the same time, it was noted that the work continues in the Parliament to finalize the text of the new law “On compulsory insurance of civil liability of owners of land vehicles,” which should be adopted under the IMF program by the end of May next year.
Now insurance companies will have to prepare for the renewed field inspections by the National Bank in order to eliminate possible violations of the law in advance, emphasized representatives of the regulator.
Andriy Pyshnyy, EBRD, European Bank for Reconstruction and Development, NATIONAL BANK OF UKRAINE, NBU, WORLD BANK
