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16.07.2010
Credit-Rating: Raised Capitalization to Partially Enhance Investors’ Protection
Credit-Rating believes that raised NBU’s (National Bank of Ukraine) requirements to banks’ capitalization and restrictions on attraction of funds from the public are aimed in the first place at protection of creditors’ rights and at decreasing banks’ dependency upon funds from the public. However, as experience shows, the banks irrespectively of size of the capital, may be vulnerable to high liquidity risk because of outflow of individuals’ funds in case the institution get no backing from its shareholders of the regulator.
The NBU’s resolution #273 of June 9, 2010 (effective as of Jul. 19, 2010) a new amount of minimal regulatory capital is set at UAH120m starting from Jan. 1, 2012. The amount of regulatory capital cannot be less than that of the bank’s authorized stock. Moreover, the banks which regulatory capital does not correspond with new limit, are prohibited to augment deposit portfolio of individuals.
According to Andrey Movchan, a Credit-Rating’s senior financial analyst, raised NBU’s requirements towards ‘small’ banks will result in slight consolidation of the banking system, or to changes in ownership structure in certain institutions. According to Association of Ukrainian Banks there are at least 50 banks with regulatory stock under UAH120m as of Jun. 1, 2010. In case the capitals of these banks are brought into accordance with new requirements, their capitalization will rise by UAH1.5bn only. Besides, Credit-Rating notes that new rules on capitalization will not considerably affect cost of services provided and competition between banks, as the portion of deposit portfolio to be affected by this ban is insignificant – at up to 2% of the banking system.
Credit-Rating agency has operated in the Ukrainian market since 2001
being committed to assignment of the national scale ratings. The agency has assigned 180
credit ratings in the financial sector and 85 bank deposit ratings. As at
July 1, 2010 the agency’s list of ratings includes 98 credit ratings in the financial
sector and 58 bank deposit ratings.
Information on all credit ratings assigned in accordance with the National Rating Scale may be found in REUTERS and BLOOMBERG information systems.
For more information, please contact:
Information and
analytic department
Sergey Rozumyak +38044490 25 50
SRozumyak@credit-rating.com.ua
Denis
Rudenko
DRudenko@credit-rating.ua
